The domestic market witnessed a heightened selloff on December 9, led by IT and oil & gas counters amid lingering concerns over a looming recession in the US while investors shift focus to the Fed policy outcome on December 14.
Equity barometer Sensex opened 120 points higher at 62,690.86 and rose overall 165 points to 62,735.42 in intraday trade in light of broadly positive global cues.
However, the index witnessed heavy profit booking after that and fell as much as 682 points in intraday trade to 61,889.11.
The index, eventually closed 389 points, or 0.62 percent, lower at 62,181.67 while the Nifty50 settled with a loss of 113 points, or 0.61 percent, at 18,496.60.
Mid and smallcaps also ended lower; the BSE Midcap index fell 0.45 percent while the Smallcap index dropped one percent.
The overall market capitalisation of BSE-listed firms dropped to ₹287.7 lakh crore from ₹289.7 lakh crore in the previous session, making investors poorer by ₹2 lakh crore in a single day.
The Nifty IT pack fell 3.14 percent and led the pack of sectoral losers. It was followed by Nifty PSU Bank (down 1.77 percent), Nifty Realty (down 1.50 percent), Nifty Metal (down 1.12 percent) and Nifty Oil & Gas (down 1.10 percent).
IT stocks suffered strong losses on worries over a recession in the key market in the US.
"Today's downfall in the domestic market was sparked by IT stocks extending their losses after warning of a potential slowdown in business on global recession fears. This was further aggravated by banks losing their grip as PSBs suffered heavy sell-offs. However, global bourses were largely positive, although the Fed is expected to raise interest rates by 50 basis points next week," said Vinod Nair, Head of Research at Geojit Financial.
Crude oil saw some gains but concerns over a recession and reduced demand kept them capped. The rupee rose 15 paise to close at 82.28 per dollar.
For the week ended December 9, the Sensex fell 1.09 percent while the Nifty lost 1.07 percent. BSE Midcap index declined 0.86 percent but the Smallcap index dropped 1.18 percent.
Technical views by experts
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities observed that the lower top formation on intraday charts and bearish candle on weekly charts indicates further weakness from the current levels.
"For short-term traders, the 20-day SMA (simple moving average) or 18,450 would act as a sacrosanct support zone, above which, we could expect a one pullback rally till 18,700. In case of any further upside, the index could move up to 18,800. On the flip side, below 20-day SMA or 18,450, a further sell-off is possible till 18,300-18,200," said Athawale.
Nagaraj Shetti, Technical Research Analyst, HDFC Securities pointed out that Nifty formed a long negative candle on the daily chart with a minor lower shadow.
"This pattern indicates a downside breakout of the range-bound movement of the last few sessions. This is not a good sign and points towards more weakness in the short term," said Shetti.
"The short-term uptrend of Nifty seems to have reversed. Having moved below the crucial support of 18,550-18,500 levels, the Nifty is expected to slide down to the next key lower support of 18,150-18,100 levels in the near term. Immediate resistance is placed at 18,600-18,650 levels," said Shetti.
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.
