Stock market crash: A 1,688 point crash in Sensex wipes Rs 7.36 lakh cr off the market

NEW DELHI: The biggest market crash in seven months wiped out Rs 7.45 lakh crore in investor wealth on Friday as traders sold everything they could as many countries discovered a new mutation of the coronavirus. Benchmark indices broke many support levels placed on technical charts.

Nervousness about the new strain of the coronavirus and expectations from the US increasing the pace of the winding down have led to recent market weakness, analysts say. India VIX, a measure of fear in the market, rose 25 percent to near 21 levels.

The package of 30 Sensex shares fell 1,687.94 points or 2.87 percent and closed at 57,107.15. Its broader peer NSE Nifty fell 509.80 points or 2.91 percent to 17,026.45.

“This trend may take some time to recover as the WHO meeting on the impact of new mutant variants and hospitalizations in the US and Europe will be watched very closely by the market. for certain sectors, such as the consumer, and help them recover after a period of consolidation,” said Amit Gupta, fund manager – PMS, ICICI Securities.


Market at a glance:

  • Pharmacy names soar as mounting concerns over Covid brighten their outlook
  • Metal Stocks Plunge Following International Trend as Futures Tank
  • It’s a deja vu for travel and leisure stocks when they take a dip
  • Tarsons Products hits 20 percent higher circuit after listing
  • Tata Power drops 7 percent after downgrade from JP Morgan

FACTORS DRIVING MARKETS

New Covid variant: Hours after South African authorities announced they had discovered a new strain of the novel coronavirus with a “highly unusual constellation” of mutations, the Center ordered states to ban travelers from or transiting through three countries where the variant was confirmed to be rigorously screened and tested. — South Africa, Botswana and Hong Kong.

More closures: European countries have expanded booster vaccinations against COVID-19 and tightened curbs overnight. Slovakia announced a two-week lockdown, the Czech government will close bars early and Germany has crossed the 100,000 COVID-19-related death threshold.

FII Sale: Net, foreign portfolio investors (FPIs) turned sellers of domestic stocks to the tune of Rs 2,300.65 crore, data available from NSE suggested. This is much more than what DIIs have bought. The sale has also dampened the spirit of investors.

Yields fall: Movements in Treasuries were also sharp after the Thanksgiving holiday, and yields quickly pulled back some of the week’s gains. The 10-year yield fell by almost 6 basis points to 1.5841 percent.

Tata Power, M&M among 5 stocks that Jefferies says could fall as much as 54%

Potential Wealth Destroyers

After an astonishing rally, the fundamentals of some companies suggest that their stocks have gained too much for their own good. Earnings and margins may not be able to keep up with the rise in stock prices, so they are now likely to fall. Equity analysts at Jefferies India have factored this into their coverage universe. The brokerage has proposed five names likely to drop as much as 54 percent from current levels.

Among the blue chip names, Cipla was the biggest winner, rising 7.23 percent. dr. Reddy’s Labs, Divi’s Labs and Nestle India were other winners.

JSW Steel was the biggest loser in the Nifty pack, falling 7.48 percent. Tata Motors, Hindalco Industries, Adani Ports, IndusInd Bank, BPCL, Maruti Suzuki and Tata Steel were others who finished in the red.

Broader market indices finished lower, in line with their headline peers. Nifty Smallcap fell 2.89 percent and Nifty Midcap plunged 3.25 percent. Nifty 500, the widest index on NSE, finished 2.93 percent lower.

Indiabulls Housing Finance, PNB Housing Finance, Trident, Alkem Laboratories, Dr. Lal Pathlabs and Pfizer were the biggest winners of mid- and small-cap indices, up 4-7 percent.

“Traders should continue with the bearish bias and use the bounce to create shorts. Investors, on the other hand, should see this as an opportunity and start building quality stocks in a diversified manner.”

— Ajit Mishra, Religare Broking

National Aluminum Company, Shriram Transport Finance, Delta Corps, RBL Bank, Chambal Fertilizers and SpiceJet were big losers from the broader market, falling 7-10 percent.

Except for Nifty Pharma, which gained 1.7 percent, all sector indices traded with austerity measures. Nifty Realty was the biggest loser, falling 6.26 percent. Nifty Metal, Nifty PSU Bank and Nifty Auto were other big losers.

Market breadth favored losers as 1,067 stocks ended in the green while 2,244 settled for austerity measures. As many as 237 stocks hit 52-week highs, mostly from the small cap space. Meanwhile, 34 names hit 52-week lows, mostly from the microcap space. About 395 stocks reached the upper circuit limits and 180 lower circuit limits.

European stocks traded lower. The London-based FTSE fell 2.66 percent, while Paris and Frankfurt fell 3.18 percent and 2.55 percent, respectively. In Asia, all markets closed in the red.

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