Investors suffered an enormous loss in the Tuesday trading session on 04 June as a result of a rapid sell-off in the market. The mayhem created due to election results uncertainty which prevailed throughout the session as the market doubted current government victory.
Investors’ wealth declined by almost Rs 26 lakh crore (Rs 26 trillion) during intraday trading. Market cap of Bombay Stock Exchange (BSE) listed companies fell to approximately Rs 426 lakh crore compared to Rs 400 lakh crore at the end of Monday trading session.
Moreover, the benchmark index, Nifty, clocked its worst session in four years. During the session, the 50-stocks index dipped upto 8.5 per cent or nearly 2,000 points.
Prior to this, Nifty had its worst session during pandemic on 23 March 2020 when Nifty ended on 7,606 levels with more than 12 per cent dip in a single session.
Benchmarks
The National Stock Exchange (NSE) Nifty 50 index ended 5.93 per cent lower at 21,884, whereas the S&P Bombay Stock Exchange (BSE) Sensex also settled lower at 72,079 levels with 4,389 points or 5.74 per cent loss on the closing bell.
Nifty Moves
In the Nifty50 index, 42 stocks were dragged in the red territory with massive fall, while 8 stocks traded with gains.
In the 50-stocks index, Adani stocks tumbled the most among the peers. Adani Ports shredded more than 21 per cent, while Adani Enterprises slumped nearly 20 per cent. State-run Coal India, Power Grid, ONGC, SBI, BPCL and NTPC slipped between 16 to 11 per cent.
Conversely, FMCG stocks, Hindustan Unilever nearly 6 per cent, while Britannia and Nestle India gained more than 3 per cent. Hero Motocorp also gained 2.91 per cent and Cipla gained 0.7 per cent.
Analyst Note
While BJP should be able to form the government again, the reform agenda of the government may go into the backburner. We believe investors should stick to the fundamentals and buy only the stocks with reasonable valuations. We believe Indian equities will go into a bear market and will fall by more than 20 per cent by April 2025,” said Amit Goel, Co-Founder & Chief Global Strategist, Pace 360.
Investors would do well to avoid the sectors which were market favourites till yesterday as the focus of the government may change. Consumer based stocks would do well from now on as the government would try its best to repair the urban consumer and rural distress, advised Goel.
Sectoral Movement
In terms of sectoral performance, Nifty Bank slipped nearly 8 per cent after touching record-high in the last session, whereas Nifty PSU Banks plummeted more than 15 per cent.
Metal also lost more than 10 per cent followed by 3.33 per cent loss in Auto. However, IT and FMCG witnessed a comparatively less fall of less than 1 per cent. Pharma also 1.38 per cent in the day.
The more domestically focussed indices, mid-cap and small-cap shredded heavily in the session. Mid cap dropped 7.88 per cent, whereas Small cap fell 8.23 per cent.
Technical Levels
“Nifty has an immediate support zone placed at 21,800 to 21,850 mark which if broken can extend weakness further towards 21,500 and 21,250 levels. However, if this level holds well then we can see 22,250 and 22,500 reclaiming at once,” said Riyank Arora, Technical Analyst, Mehta Equities.
At present levels, the risk reward looks favourable on the buying side with a strict stop loss kept at 21,800 mark for potential targets of 22,250 and 22,500 on the benchmark, added Arora.
Similarly, Bank Nifty has a major support zone placed at 46,500 to 46,700 zone which if broken can extend weakness towards 46,000 and 45,500 levels, further said Arora.
