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Sensex tumbles 458 pts, Nifty below 12,150; factors behind market pain

BSE Metals index was the top sectoral loser, with all of its components ending in the red.

, ETMarkets.com|
Last Updated: Jan 27, 2020, 07.13 PM IST
Sensex tanks 458 pts, Nifty barely holds 12,100; Tata Steel drops 4%
Sensex tanks 458 pts, Nifty barely holds 12,100; Tata Steel drops 4%
Mumbai: The domestic stock market tumbled on Monday weighed down by weakness in global equities, as rising concerns over fast-spreading coronavirus dampened demand for riskier assets. Investors on Dalal Street also chose to stay on the sidelines ahead of Union Budget 2020.

BSE benchmark Sensex fell 1.10 pe cent or 458.07 points to 41,155.12, while Nifty ended at 12,119.00, down 129.25 points or 1.06 per cent.

"Growing catastrophic effect of coronavirus is impacting the world financial markets, raising fears of a slowdown in the global economy. In India investors are turning cautious given selling pressure in the global market and big event risk of Budget announcement this weekend. A lot has been factored in the market about the wish list," says Vinod Nair, Head of Research, Geojit Financial Services.

Here are key factors that contributed to the market’s fall on Monday:

Flight to safety: Risk was off the table as investors grew increasingly anxious about the economic impact of China’s spreading virus outbreak, and demand rose for safe haven assets.

Global markets: The large-scale risk aversion sent markets across the globe lower. Japan's Nikkei average slid 2 per cent, logging its biggest one-day fall in five months. The US S&P 500 mini futures were last down 1 per cent, having fallen 1.3 per cent in early Asian trade. The pan-European STOXX 600 declined 1.5 per cent by 0808 GMT.

Budget: Market sentiment also remained cautious ahead of 2020. Mayuresh Joshi, Head of Equity Research at William O'Neil said: “Virus spreading in larger regions panicked most global markets. Indian market was no different. Elements in terms of profit booking also worked ahead of Budget.

Nirav Chheda, Technical Analyst at Nirmal Bang Securities said: “Market can see wild moves ahead of Budget such as today. On the downside, 12,000 is a good support for Nifty.

Banks bleed: Financials contributed the most to the Sensex’s decline. Private lender HDFC Bank was down 2.51 per cent, while mortgage lender HDFC shed 2.25 per cent. The country’s biggest lender State Bank of India declined 2.42 per cent.

Metals slump: BSE Metals index was the top sectoral loser, with all of its components trading in the red. It was down 2.95 per cent.

Market at a glance
Market breadth was negative with three shares declining for every two that advanced.

BSE Healthcare was the only sectoral index to close in the green, as it advanced 1.43 per cent. Wockhardt Pharma rallied 18.01 per cent, as the company reported quarterly profit for the first time in three years.

As many as 21 out of 30 Sensex stocks closed lower. Tata Steel and IndusInd Bank were the top losers, as they slumped 4.31 per cent and 3.37 per cent respectively. Ahead of December quarter earnings, Maruti Suzuki edged 0.24 per cent higher.

Anil Ambani-led companies logged declines. Reliance Home Finance, Reliance Power, Reliance Capital and Reliance Infrastructure dropped 4.68 per cent, 4.83 per cent, 4.99 per cent and 4.78 per cent respectively.

Analyst views
“Bears dominated the session, however, broader market were better placed. The pharma sector was buzzing with strong activity while metals witnessed sharp profit booking. The 12,100 zone remained crucial for the bulls to hold, as a decisive breach below the support zone would provide fresh momentum on the downside, and in that event, index can test 11,800 support zone,” -- Amit Shah, Technical Research Analyst, Indiabulls Ventures.

"Coronavirus outbreak in China took a toll on Indian equities as financials and metals bore the brunt of the selling. Only select pharmaceutical stocks gained, while the BSE smallcap index also closed in the green,” -- S Ranganathan, Head of Research, LKP Securities.

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