Market Wrap: Sensex, Nifty fall almost a percent; investors lose ₹3 lakh crore in a day

Worries over a recession in the US and Europe after rate hikes by a slew of central banks continued keeping the market under pressure on December 16.

Analysts pointed out that as rate hikes are expected to continue in the significant part of 2023, the fear of recession in the US and Europe has grown stronger. India may be less impacted by a downturn in the US and Europe, but it cannot decouple itself entirely from an economic slowdown in the West.

More than the rate hikes, the hawkish tone of the central bankers seems to have hit the market. Central bankers have dealt a blow to market expectations by stating that the fight to tame inflation was not over yet.

"Interest rates went up in the euro area, Britain, Switzerland, Denmark, Norway, Mexico and Taiwan on December 15, following the US rate hike a day before, and central bankers vowed to keep raising rates to bring down prices," reported Reuters.

Key highlights of the day

A broad-based selloff dragged Sensex 461 points, or 0.75 percent, lower to 61,337.81 while the Nifty50 closed at 18,269, down 146 points, or 0.79 percent.

Mid and smallcaps underperformed as the BSE Midcap index fell 1.44 percent while the Smallcap index ended 0.96 percent lower.

The overall market capitalisation of BSE-listed firms dropped to ₹285.5 lakh crore from ₹288.5 lakh crore in the previous session, making investors poorer by ₹3 lakh crore in a single session.

Even though the market ended in the red, as many as 125 stocks, including Larsen & Toubro, UCO Bank, Raymond, Indian Overseas Bank and Mahindra CIE Automotive, hit their 52-week highs in intraday trade on BSE.

Crude oil prices suffered losses on the prospects of low demand due to a recession in the US and Europe. Brent Crude fell more than 2 percent to trade near the $79 per barrel mark.

The rupee slipped 10 paise to close at 82.87 per dollar amid losses in the equity market.

Top Sensex gainers and losers

Dr Reddy'a Labs, Mahindra and Mahindra and Asian Paints ended as the top laggards in the Sensex index. On the other hand, HDFC Bank, Hindustan Unilever, Nestle and Tata Steel ended with minor gains in the index. 

Sectoral picture

All sectoral indices ended in the red, with Nifty PSU Bank falling 2.92 percent. The Nifty Bank index fell 0.64 percent while the Private Bank index ended 0.61 percent lower.

Nifty Healthcare, Realty, Pharma, IT, Media and Auto indices fell over a percent each.

Experts take

Siddhartha Khemka, Head of retail Research at Motilal Oswal Financial Services said the domestic equities slipped into negative territory following US Fed's hawkish commentary and weakness in global markets.

He added that the markets will likely remain in the consolidative range due to a lack of triggers in the near term. Lower participation from institutional investors due to upcoming year-end holidays would also keep the markets lacklustre.

Vinod Nair, Head of Research at Geojit Financial Services said: “Global markets extended their rout as the ECB and BoE followed the Fed in raising policy rates by half a percent while maintaining a hawkish tone on inflation.” 

"The aggressiveness of central banks in combating inflation has raised concerns about the global economy's health. Despite attempts to recoup losses, a lack of global support pushed the indices back into negative territory," Nair added.

Technical views

Amol Athawale, Deputy Vice President - Technical Research at Kotak Securities said a lower top formation on daily charts and double top reversal formation on intraday charts are indicating further downside from the current levels.

Athawale pointed out that the Nifty not only broke the important support level of 18,400 but also closed below this level.

"The next support level for the index would be 50-day SMA (simple moving average) or 18,100-18,000 levels. On the other hand, 18,400 could act as immediate resistance for the index, and above the same, the index could retest the 20-day SMA or 18,550. In case of further upside, the index could move up to 18,700," said Athawale.

Key market data

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.