Market wrap: Sensex falls 200 points, Nifty settles below 17,250; investors lose more than ₹1 lakh crore

The domestic market ended lower for the second consecutive session on October 10 following weak global cues as investors avoided riskier equities amid concerns over global economic slowdown and geopolitical tensions.

Sensex opened 767 points lower at 57,424.07 against the previous close of 58,191.29 and fell 826 points to the intraday low of 57,365.68.

The index closed 200 points, or 0.34%, down at 57,991.11 while the Nifty closed 74 points, or 0.43%, lower at 17,241.

Mid and smallcaps suffered more as the BSE Midcap index fell 0.87% while the Smallcap index declined 0.58%.

Investors lost nearly ₹1.3 lakh crore in a single day as the market capitalisation of BSE-listed firms dropped to ₹274.3 lakh crore from ₹275.6 lakh crore on October 7.

Hopes that the US Fed may change gears on the monetary policy stance were dealt a blow after the US jobs data showed the unemployment rate dropped to 3.5% in September from 3.7% recorded last month.

The US labour market remains tight despite the Fed's steep interest rate hikes.

"The Fed isn’t going to like this strong report as it wants the labour market to weaken sharply to avoid a so-called wage-price spiral in which workers demand ever-higher pay to stay ahead of inflation and companies pass those higher wages costs on to consumers. Markets are now pricing in another 75bps hike in the next FOMC meeting on 2nd November,” said Ritika Chhabra- Economist and Quant Analyst, Prabhudas Lilladher.

On the geopolitical front, the Russia-Ukraine war situation is worsening. "Russia struck cities across Ukraine during rush hour on Monday morning, killing civilians and destroying infrastructure in apparent revenge after President Vladimir Putin declared an explosion on the bridge to Crimea to be a terrorist attack," reported Reuters.

Shares of Axis Bank, TCS, Maruti, Tech Mahindra, Wipro and Infosys ended as the top gainers while Asian Paints, Titan, ITC, Reliance Industries, HDFC and Nestle ended as the top laggards in the Sensex index.

IT stocks those ahead of the quarterly earnings of the sectoral heavyweight TCS.

Among the sectoral indices, BSE IT and Teck rose about a percent each while BSE Consumer Durables, Power, Utilities and FMCG ended over a percent lower.

"Fear of an aggressive rate hike by the Fed on the back of strong employment data in the US disrupted the global equity trend. Inflation in the US is forecasted to stay high given low supply and high demand scenarios. To bring some parity in the economy, the Fed will have to target to lower demand by increasing the unemployment rate, which is not factored by the market," said Vinod Nair, Head of Research at Geojit Financial Services.

Crude oil prices saw some minor decline but benchmark Brent Crude traded above the $95 a barrel mark. The rupee ended a paise higher at 82.32 per dollar.

"Rising crude prices and depreciating rupee is increasing the risk of imported inflation in India, affecting the domestic market," said Nair.

Technicals

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities observed that the Nifty found support near 17,050 and bounced back sharply. On daily charts, the index formed a bullish candle and also formed a reversal formation which is broadly positive.

"For traders, the support has shifted to 17,150 from 17,050. Above 17,150, the index could retest the level of 17,400-17,450. A fresh round of selling is possible only after the dismissal of 17,150. Below which, the index could slip to 17,050-17,000,” said Chouhan.

'Deepak Jasani, Head of Retail Research, HDFC Securities pointed out that the Nifty recovered well from the opening lows by taking support from the 10-day moving average. In the process, it also filled the up-gap made on October 4, nullifying the large bullishness. Jasani believes Nifty could stay in the 17,102-17,337 band for the near term.

Key market data

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