Indian stock markets fell sharply today, led by a sharp selloff in late trade. Despite a firm opening, the 30-share BSE benchmark Sensex slumped 460 points to end at 57,060. During the day, it hit a high of 57,975 and a low of 56,902. The NSE Nifty tanked 0.83% to 17,102 while Bank Nifty corrected 0.92%. The selling pressure was broad-based with all the sectoral indices on NSE closing in red.
Some analysts attributed the sharp selloff to participants lightening positions ahead of LIC IPO which opens next week. Also the next week will be a truncated one due to a public holiday on Tuesday.
“Domestic market reduced exposure ahead of the shortened next week and opening of India’s largest IPO,” said Vinod Nair, Head of Research at Geojit Financial Services.
The government is selling over 22.13 crore shares in LIC at a price band of ₹902-949 apiece in the initial public offering, which opens on May 4 and closes on May 9. LIC would start trading on stock exchanges on May 17. The government expects to raise around ₹21,000 crore from LIC IPO, which values the state-owned insurer at ₹6 lakh crore.
The selloff came despite some Asian and European markets registering gains. Axis Bank, Power Grid, Wipro, State Bank of India, Maruti, Titan and NTPC were among the major laggards from the Sensex pack. Shares of Axis Bank tumbled 6.57%.
“The benchmark opened higher amid supportive global cues and inched higher gradually as the day progressed. However, the news of war intensifying between Russia-Ukraine completely changed the tone in the latter half. As a result, the Nifty index erased all the gains and settled around the day’s low,” said Ajit Mishra, VP – Research, Religare Broking Ltd.
“We’ve been seeing the index oscillating in a broader range for the last two weeks and there’s no clarity over the next directional move yet. We reiterate our cautious view and suggest waiting for a decisive break from the 16,800-17,300 range. Apart from the global cues, domestic factors like earnings, LIC IPO and auto sales numbers will also be in focus.”
Technical Outlook
“The benchmark index was holding the gains for the initial part of the day after a positive opening, but during the last hours of the closing, we witnessed a sharp sell-off in the market. Derivatives data was continuously indicating resistance around 17300 levels as higher OI (open interest) buildup was seen over there. On the call side, the highest OI witnessed at 17300 followed by 17800 strike price while on the put side, the highest OI was at 17000 followed by 17100 strike price,” said Sumeet Bagadia, executive director at Choice Broking.
“Technically, the nifty index has slipped from Middle Bollinger Band formation and moved below 21 days EMA that suggest bearishness for the coming day. Moreover, the index has also formed a Bearish Engulfing candlestick pattern on the daily chart, which is a bearish indication for the near term. However, the index is still taking support at 50-SMA and an indicator Stochastic is hovering near the oversold zone. At present, the index is having support at 16,950 levels while resistance is placed at 17300 levels. On the other hand, Bank Nifty has support at 35700 levels while resistance at 36,500 levels.”
