Benchmarks Sensex and Nifty traded sharply lower on Monday, tracking weak global markets on fresh cues from US-China trade war.
BSE Sensex traded 1,724 points lower at 31,993 and NSE Nifty fell 500 points lower to 9,358.
UPL, GAIL, Vedanta, Hindalco, Tata Motors, ICICI Bank were among the top losers today, while Cipla, Sun Pharma, Dr Reddy's Laboratories were among the top gainers on Nifty.
Sectorally, barring pharma, all the other sectors While metal, banking and were in the red. Metal, banking and financial sectors dropped over 7% each, realty and auto were down 6.5%, followed by 5% fall in media and PSU Banking index.
Following weakness in equity markets, Rupee also opened lower in the currency market today at 75.73 per dollar, as against the last closing of 75.12 per US dollar.
Global markets fell as US-China political uncertainty and China currency devaluation against the US Dollar kept the trend cautious.
Domestic indices started off the week sharply bearish on Monday, tracking weak cues from overseas. At the opening bell, BSE Sensex traded 969 points lower at 32,768 and NSE Nifty declined 326 points to 9,553.
Here are the five factors that led to market's decline today
1. Global cues today
Oil prices and global stocks came under pressure in today's session amid rising US-China tensions over the coronavirus. US President Donald Trump has threatened China to impose new tariffs and blamed the country for creating the new coronavirus in a Chinese laboratory.
Where Dow Jones Industrial Average closed 1.17% lower, S&P 500 lost 0.92% and the Nasdaq Composite dropped 0.28%. Asian markets also started the week on a bearish note, tracking weak cues. Contrary to the weak trend, Shanghai and Set Composite were rising 1.5% today.
Ajit Mishra, VP - Research, Religare Broking said," The news of US president contemplating fresh tariffs on China over its mishandling of the pandemic triggered a sharp decline in the US markets which further worsened with the warning from Apple and Amazon."
Vinod Nair, Head of Research at Geojit Financial Services said," The global market is worried about deglobalisation and trade war which will impact further the economy, unemployment and possible bankruptcies in the future."
Brent Crude also fell to $25.8 per barrel, down 2.27%.
2. March earnings
Domestic sentiments were also subdued, taking cues from the latest released March quarter earnings, that were off the street estimates.
Companies that recently announced their March quarter earnings are Reliance Industries, Tech Mahindra, Hindustan Unilever, Apollo Tricoat Tubes, Laurus Labs, Aditya Birla Money, ICICI Lombard, AU Small Finance Bank among others.
Where RIL share price fell 3.22% intraday after Q4 results, Hindustan Unilever fell 5.26%. Tech Mahindra stock lost 7.8% after Q4 earnings.
Apollo Pipes share price was down 7.5%, followed by ICICI Lombard General Insurance that fell 6.6% and AU Small Finance Bank shares that traded 5% lower, respectively.
3. Lockdown extension
In domestic cues, sentiments turned pessimistic after the Modi government extended the nationwide lockdown till 17 May 2020 during the last weekend.
Meanwhile, the nation has reported a total of 42,533 coronavirus cases, including 11,706 cured or discharged and 1,373 deaths.
Expressing views over the lockdown extension and its impact, Ajit Mishra, VP - Research, Religare Broking said," Much to everyone's surprise, the government announced a further extension of lockdown for 2 weeks from May 4 with some easing in select green zones."
4. Weak economic data
India's March eight core industries growth came in at a fall of 6.5% as compared to 7.1% on a monthly basis.
April Manufacturing PMI stood at 27.4 against 51.8 on a month-on-month basis, pointing to the sharpest deterioration in business conditions across the sector since data collection began 15 years ago.
Vinod Nair, Head of Research at Geojit Financial Services said,"The market has realised a concern, based on latest economic & corporate data, that the cascading effect on the domestic economy and corporate earnings is much more than anticipated.
5. Nifty outlook
In the last week, NIFTY gained in all four trading sessions and finally, ended holiday truncated week on a strong note.
Markets globally ended last week on a bullish note as news about positive trial results of an experimental COVID-19 treatment helped investors shrug off weak economic data. Last week, USFDA granted emergency use authorization (EUA) of antiviral remdesivir for treatment of COVID-19 patients.
Although weak economic data coupled with corporate earnings and monetary policy meeting by central banks turned market to cautious stance, experts said.
For today's outlook, while support is seen at around 9,235 and 9,100 levels, resistance is observed at 9,740 and 9,900 levels.
Ajit Mishra said,"The sharp cut in the index in early trade on Monday could be a shock for many and that might result in erratic swings. Technically, 9200 would be a critical support zone for the Nifty index."