D-Street Ends Flat; Broader Markets Worst Hit

The Dalal-Street witnessed volatility after surging to its record highs in the previous few sessions. The sell-off was mainly witnessed in the small and Midcap stocks after the BSE issued a circular for surveillance measures on Monday evening. However, the benchmark indices cleared their intraday losses and closed flat in the closing trade on Wednesday, August 11.

At close, the BSE Sensex was down 28.73 points at 54,525.93 with 12 advances and 18 declines in the 30-share index. Shares of Reliance Industries added a per cent and contributed in the recovery from lower levels, NTPC and Tata Steel added 2-3 per cent each too. On the flipside, Bajaj Auto, Sun Pharma, Kotak Mahindra Bank, and ICICI Bank dipped over a per cent each.

Similarly, the Nifty-50 index ended flat with a minimal gain of 2.15 points at 16,282.25.

Tracking the broader markets, the BSE Midcap and Smallcap indices recovered some of their intraday losses after the exchange issued a clarification on the circular issued yesterday. The BSE Smallcap index ended lower by 216.75 points, and the Midcap index closed down by 51 points.

Sector-wise, the Metal sector outperformed amid volatility across the board, while Pharma, FMCG, Auto, and IT sectors underperformed during the day's trade. The Nifty metal index jumped over three per cent led by Vedanta(+6.46 per cent), SAIL(+5.89 per cent), and Jindal Steel(+5.22 per cent).

What triggered the major sell-off in the broader markets?

BSE on Monday, August 10 introduced a circular to maintain market integrity and curb excessive price movement in securities listed on BSE to strengthen extant surveillance measures. However, the circular introduced is applicable for scrips listed only on BSE as the counters in NSE are comparitively less than the BSE, experts mentioned.

The circular will be effective from August 23 and will prevent any stock (under 5 per cent circuit limit) to move beyond 30 per cent in a week and 60 per cent in a month.

Experts feel that the investors engaged only in BSE stocks should be cautious for a short period of time amid the new circular in place.

In a conversation with BW Businessworld, Gaurav Garg, Head of Research at CapitalVia Global Research, said, "We expect the volatility to continue for some more time in the broader markets on various interpretations and expectations from this move. Also, the broader markets had a good run over past few months and some of the stocks were trading at very high valuations."

Those who were investing in BSE-only scrips need to be cautious. This may well cause liquidation to happen in various stocks, Garg added.