Market participants suggested that the sell-off in the later half of the day intensified due to squaring off of long positions in the derivatives market by traders ahead of Thursday’s futures and options contract expiry.
For the day, the Nifty50 index ended 1.8 per cent, or 265.35 points, lower at 14,549.50, while the BSE-Sensex closed at 49,180.31, down 871 points or 1.7 per cent.
In the broader market, the sell-off was similar with the Nifty Midcap 100 and Nifty Smallcap 100 index ending 2.0 per cent and 2.1 per cent lower, respectively. The market breadth was weak as three stocks fell for every one stock that rose on the National Stock Exchange.
Here are the major movers in today’s trade:
Volatility rears its ugly head
Fear gauge India VIX jumped nearly 9 per cent today given the risk averse sentiment among traders and in light of the rise in the US Dollar index, which is very close to breaking out above its resistance at 92.5. Dealers suggested that further strength in the dollar will trigger outflows from emerging markets like India going ahead.
Banks lead the losers
Nifty Bank index slumped 2.6 per cent and underperformed Nifty50 in further sign of weakness in the pack. Concerns over asset quality numbers that banks may report in the March quarter after the Supreme Court lifted the temporary ban on bad loan recognition are weighing on sentiment towards the sector.
Commodity stocks feel the heat
Risk aversion among investors was felt in the performance of commodities-linked stocks as the Nifty Commodity index, which consists of 30 commodity companies, fell 2 per cent. Concerns that renewed COVID-19 lockdowns in India and Europe will further dent global demand for commodities partly spurred the sell-off, said dealers.
Cipla resists sell-off
Shares of Cipla ended as the top gainer on Nifty50 as investors flocked to haven stocks that could help them steer out of the recent bout of volatility in the market. The company’s strong earnings profile and the fact that it benefits from rise in sale of COVID-19 drugs helped the stock gain traction among investors.
Which stocks gave a sell signal?
As many as 30 stocks listed on the NSE gave sell signals based on MACD indicators including prominent names like Escorts, IDBI Bank, Gati and Dalmia Bharat.
What’s ahead for the market?
Traders aggressively bought the out-of-money put options of the Nifty50 index expiring on April 1 suggesting that they expect today’s losses to continue in the coming sessions. In the futures segment, traders added short positions in the April contract of Nifty50.
“The support range of 14750 (for Nifty50) was disrespected and we dropped over 200 points once that level broke. Keeping a stop loss at 14900, traders can target 14350-14400 as a potential target for the index. Until we do not get past 14900, the short to medium-term trend remains bearish,” said Manish Hathiramani, technical analyst at Deen Dayal Investments.
