There seems to be no respite for the bulls.
The stock markets slumped further into the red on Monday as the benchmark BSE Sensex tanked 537 points as investors, fearing liquidity crisis, continued to dump banking and NBFC stocks.
The fall was despite finance minister Arun Jaitley's assurance to ensure adequate liquidity for non-banking financial companies and mutual funds and RBI and Sebi's statement to take necessary action, if needed.
Falling for the fifth consecutive session, the Sensex tanked 536.58 points, or 1.46%, to end at a two-month low of 36305.02, logging its biggest single-day loss since February 6, when it had shed 561.22 points.
The broader NSE Nifty slipped the 11000-mark and closed at 10967.40, plunging 175.70 points, or 1.58%.
The sentiment was also dampened by a rise in Brent crude prices, which hit a four-year high before trading at $80.07 a barrel, while the rupee fell 43 paise to close at 72.63 per dollar.
The broader market, too, continued to bleed with the BSE Midcap and Smallcap indices losing 2.40% and 2.72%, respectively.
"The correction is happening in the high valued stocks. We will see a sector rotation happening in the coming days. Around 2% correction is more possible in the near-term," Rahul Shah, vice-president, equity advisory group at Motilal Oswal Financial Services said.
Shah said the correction is overdone now and the investor shift is expected from the NBFCs to banks. Investors would also watch the F&O expiry this week along with global events like US Federal Reserve meeting.
Investors have lost Rs 8.48 lakh crore in the last five trading sessions as the 30-share index lost a total of 1,785.62 points, or more than 5%, in the slump that began with a run after IL&FS default on payments.
NBFC and housing finance firms' stocks fell up to 8.4% on Monday.
Shares of Edelweiss Financial Services plunged 8.43%, Indiabulls Housing Finance 7.57%, PNBHousing Finance 7.56%, Cholamandalam Investment and Finance Company 7.15%, Can Fin Homes 6.39% and Gruh Finance 5.88%.
"The Government will take all measures to ensure that adequate liquidity is maintained/provided to the NBFCs, the mutual funds and the SMEs," Jaitley had tweeted ahead of the opening of stock markets.
"This turmoil which was triggered last week by the run on housing and NBFCs continued to trouble the market. In spite of assuring statements by key government and institutional leaders, the market was concerned about the near-term headwinds like quality and increased cost of funds along with tighter liquidity. At the same time, consolidation in emerging markets, continued increase in oil prices and high valuation further aggravated the anxiety," Vinod Nair, head of research at Geojit Financial Services, said.
From January 1, until Monday, the 30-share index has gained 2,492.72 points, or 7.37%. The index had hit a high of 38896.63 on August 28. The 50-share Nifty, on the other hand, has gained 531.85 points, or 5.10% from January 1 until Monday. The index had also hit a lifetime high of 11738.50 on August 28.
Among the Sensex stocks, Mahindra & Mahindra, HDFC, IndusInd Bank, Adani Ports and Bharti Airtel were the biggest losers, shedding as much as 6.46%.
Sectorally, except BSE Information Technology (2.06%) and Energy (0.44%), 17 sub-sectoral indices closed in the negative zone. BSE Realty was the biggest loser, plunging 5.10%, followed by Auto (3.75%), Finance (3.46%), Telecom (3.30%) and Consumer Discretionary Goods and Services (3.03%).
"Major policy announcement from the government or a regulatory relief will be required to break the negative momentum. We feel Nifty can find support between 10866-10750 zones. The reasonable valuation and high energy prices have brightened prospects of the Energy sector. We feel that this sector is likely to outperform the markets," V K Sharma, head PCG & capital markets strategy at HDFC Securities, said.
The foreign institutional investors sold shares worth Rs 523.94 crore on Monday while the domestic institutional investors bought shares of Rs 1,527.67 crore on a net basis.
Market breadth was negative as 2,155 scrips declined, 500 stocks advanced and 162 remained unchanged on BSE. As many as 467 securities hit their 52-week low on Monday. Total turnover in the equity segment was Rs 3,772.30 crore.
According to a report by the Motilal Oswal Financial Services, Nifty has been making the lower top - lower bottom and closed below its rising trend line by connecting swing lows of 9952, 10557 and 11100 zones. "Now till it holds below 11080 zones weakness could continue towards recent swing lows of 10866-10850 zones which are 50% retracement of the entire upswing from 9952 to 11760 zones," the report stated.
Globally, in the Asian region, Hong Kong's Hang Seng fell 1.74%, while financial markets in Japan and China were closed on Monday for a public holiday. Europe displayed a similar trend. Paris CAC 40 was down 0.19% and Frankfurt's DAX edged lower by 0.42% in early deals. London's FTSE too had shed 0.19%.
FALLING KNIFE
- Rs 8.48 lakh crore – lost by investors in the last five sessions
- 1,785.62 points – lost by Sensex in the last five sessions
- 2,492.72 points –gained by the Sensex since January 1
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