Sensex gives up 240 pts gains, ends 204 pts lower; 4 key factors

Sensex and Nifty on Tuesday had snapped a nine-session losing spree.

Only three sectors -- FMCG, IT and realty -- ended in the green.
NEW DELHI: After a taking a day’s breather, the domestic equity market was back to its losing ways on Wednesday on selling in bank stocks and fresh concerns over health of the global economy.

The mood overseas was somber as grim Chinese macro data and fresh Italian debt woes cast a shadow over global markets, which rubbed off on Indian equities too.

BSE Sensex ended down 204 points or 0.55 per cent lower at 37,115 with 26 of out of 30 constituents in the red.

Its NSE counterpart Nifty settled at 11,157, down 65 points or 0.58 per cent.

Both the indices traded higher for most of the day and gave up gains towards the end of the session as selling pressure returned.

Sensex and Nifty on Tuesday had snapped a nine-session losing spree.

The advance-decline ratio on the BSE stood at 2:3, meaning for every two stocks that gained, three declined.

Markets at a glance
In the Sensex pack, YES Bank with a fall of 8.45 per cent was the worst performer. It was followed by Tata Motors, IndusInd Bank, Coal India, Vedanta and Sun Pharma.

On the other hand, Bajaj Finance, ITC, Kotak Mahindra Bank and Infosys were among the top gainers. However, barring Bajaj Finance, which rose over 4 per cent, others gained less than 1 per cent.

Dalal Street minnows declined in line with benchmark Sensex. The BSE Midcap shed 0.67 per cent and BSE Smallcap 0.45 per cent.

In the BSE sectoral space, metals (down 2.08 per cent) was the worst hit, followed by telecom, utilities, bankex and auto.

Only three sectors -- FMCG, IT and realty -- ended in the green.

Factors that weighed on the market:

Bearish global cues
The selling in global stocks intensified amid poor cues from European markets amid fresh worries over mounting Italian debt. Grim Chinese data added to the concerns casting a shadow over global markets. Italian stocks declined 0.7 per cent to lead European stocks lower while France's benchmark slipped 0.4 per cent, Reuters reported.

S&P futures too traded lower, indicating a weak start to the US stocks on Wednesday.

Selling in bank stocks
Private bank stocks namely, IndusInd Bank, ICICI Bank and YES Bank, along with index heavyweight HDFC were among the top drags. They together were responsible for half of the point-wise decline in Sensex. A look at the Nifty Private Bank index shows it declined
0.92 per cent.

Technical Factor
According to Sahaj Agrawal, VP – Research (Derivatives) at Kotak Securities, broader market continued to trade with a negative bias with pressure seen in the midcap space.

“Nifty’s support was seen in the range of 10,850-10,900 and we expect the same to hold going ahead. Volatility to remain high on account of the upcoming election results. Post the recent correction, we remain structurally positive above 10,850 and await broader market health to improve before initiating aggressive longs," the expert added.

Election-induced volatility
In the past, it has been seen that election months generally sees high volatility. This has been true in the last four instances, where Sensex swung in the 14-36 per cent range around election results.

Volatility too has jumped during election months this time around, data suggests.

On Wednesday, India VIX jumped 5 per cent. It seems that the historical trend is being played out again.




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