Benchmark indices turned volatile and ended majorly lower on Monday, amid mixed global equities. Extending fall for the fifth consecutive session, Sensex ended 1,145 points lower at 49,744 and NSE Nifty 50 index lost 306 points to 14,675.
Last Friday, the S&P BSE Sensex closed 434 points lower at 50,889 and NSE Nifty 50 index fell by 137 points to 14,981. Last week, the indices corrected 1.5%. However, both are up 4.5% each since the beginning of the year.
M&M, Axis Bank, L&T, Maruti, Tech Mahindra, Dr Reddy's top losers traded among the top losers on Sensex. Meanwhile, ONGC, HDFC Bank and Kotak Bank were the only stocks that ended as the top gainers in today's bearish session.
The market breadth, indicating the overall health of the market was negative on the BSE, with 1,038 shares rising, 1,985 shares falling and a total of 156 unchanged shares.
The NSE's India VIX, a gauge of the market's expectation of volatility over the near term, gained 14 per cent to 25.47. BSE's market capitalisation fell to Rs 200 lakh crore in today's session.
Traders said markets are experiencing correction after significant gains made post the Union Budget and positive quarterly results. Further, fresh concerns over the increase in the number of COVID-19 cases contributed to nervousness in the market.
Domestic markets dropped further by the second half of Monday after European stocks declined at the opening bell amid cautious trade in global markets as investors focused on the developments surrounding the pandemic and vaccine rollout
Asian markets were trading mixed as China left its key lending rate unchanged at 3.85% over the weekend.
US markets closed on a muted note on Friday after witnessing some bounce back after Janet Yellen backed more stimulus spending.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said,"As the last week of trading in February begins, there are some negative signals & news. The rise in the US 10-year bond yield to 1.36% reflects the markets' concern about a potential rise in inflation. The ultra-easy monetary policy along with the $1.9 trillion fiscal stimulus proposed by the Biden administration may trigger inflation, which has been conspicuous by its absence for long. Back home, the escalation in Covid cases in Maharashtra is emerging as a cause of concern. These concerns have impacted FPI flows to the market which, though positive, appears to be slowing down. Clear trends on these concerns have to be watched."
Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited said," The market failed to show resilience to stay above the Nifty 50 Index level of 14750. While it is subject to further price action evolution, the technical factors are shifted today to support a further correction in the future. Any corrective wave down should find support around 14500-14300. The traders to refrain from building a new buying position until we witness a correction till 14300-14500 level. The volatility is observed to expand in today's trading session indicating profit booking and stock distribution at a higher market level."
On the currency front, Indian Rupee jumped 16 paise to close at 72.49 per US dollar, compared with its previous closing of 72.65.
On markets closing -- Ajit Mishra, VP - Research, Religare Broking said,"Markets started the week on a feeble note and lost over 2%, tracking subdued global cues. Among the benchmark indices, the Nifty index slipped below the crucial support zone of 14,800 and finally closed at 14,676 levels. The broader market indices too witnessed sell-off as both midcap and smallcap ended with losses of more than 1%. The recent spike in the COVID cases combined with subdued global cues is weighing on the sentiment. After this slide, Nifty has lost momentum and the next major support exists at 14,300. Going ahead, macroeconomic data i.e. GDP data and core sector data and updates on COVID-19 cases would be actively tracked."
In its technical market review, Choice Broking said in a note tlday," After a negative opening, both benchmark indices corrected after a levitation concern for return of lock down situation in a few states which hurt the sentiment and based on which the Nifty gave an intraday correction of over 300 points and settled at 14675 level. Sector wise, media, PSU bank and auto witnessed an average loss of somewhere around 2%, while only metal traded firm in green with a gain of 2.00%. Technically, the benchmark index has given a close below its 21 Days Moving Average which shows further concern for an upcoming trading session, based on which we may see pain in the Nifty, which has a strong support at 14480 while upside Resistance comes at 14800.
Vinod Nair, Head of Research at Geojit Financial Services said,"Rising economic restrictions from a spike in virus cases and weak global cues hit the domestic market sentiment. The rate of market fall was aggravated by a sharp rise in volatility, being a monthly F&O expiry week. FPI inflows which were leading the rally slowed down due to global vulnerabilities from rising bond yield & inflation. However, this is a buy on the dip market, a short-term correction will trigger new buying, as economic fundamentals have improved, with more focus on industrial & cyclical."