Sensex crashes 1,200 pts from day's high, Nifty below 22,750: Key reasons behind markets turning red
Profit booking, elevated crude prices among key reasons behind significant market fall on October 21
Benchmark indices Sensex and Nifty fell significantly from day's high to trade in the red on October 21 due to various reasons, including profit booking. At 12:19 am, the Sensex was down 406.64 points or 0.55% at 73,446.26, and the Nifty was down 164.25 points or 0.71% at 22,728. About 735 shares advanced, 3,128 shares declined, and 157 shares were unchanged. Key reasons behind market decline Profit booking emerged at higher levels as Sensex fell 1,200 points from day's high while Nifty was trading below 22,750-mark.
In the broader market, while the mid-cap indices fell around 1% each, the small-cap trackers shed more than 1%. On the sectoral front, only five indices were well in the green. In the 50-stock index, ICICI Bank and Reliance Industries, up around 2% each, lent the most support while Bajaj Finance and Eternal limited the gains. Eternal was down almost 2% ahead of its earnings for the September quarter.
The Nifty IT index continued to outperform its sectoral peers and was up more than 2%, driven by gains in Infosys, Tech Mahindra, and Tata Consultancy Services. The Nifty Cement gained the most after the IT index, largely supported by the rise in UltraTech Cement. The Nifty Oil & Gas index was up 0.6%, mostly on account of gains in Reliance Industries. Among the losers, the Nifty Auto fell over 1% to be the worst hit.
All constituents of the index fell, with Sona BLW Precision Forgings down more than 3% and TVS Motor Co., Eicher Motors, and UNO Minda down around 2% each. In some earnings-led moves, Gallantt Ispat fell more than 7% after its consolidated net profit for the September quarter fell 32% on year to Rs 60.5 crore. The stock was the top loser in the Nifty 500. Further, ABB India fell after its Swiss parent reported a 2% fall in net income for the quarter ended September.
ABB India was down almost 5%, among the top laggards in the Nifty 200 universe. 2) Elevated crude prices Brent crude oil futures hovered above $110 per barrel as the US and Iran continued their strikes against each other in the Strait of Hormuz and this is likely to keep market participants on edge. "We're knocking the sh*t out of them," US President Donald Trump said at a campaign rally in Kansas.
In the near term, "...with Brent crude prices and US bond yields remaining elevated, the market is likely to remain under pressure", V.K. Vijayakumar, chief investment strategist at Geojit Investments, said in a note. Higher oil prices are a challenge for India, which imports most of its requirements, as they add to the import bill, strain the country's fiscal deficit and hit corporate profits. Nifty is taking strong resistance at 23,100 and needs to cross it decisively for any bullishness to return to the markets, said analysts.
"On the higher side key level to watch is Monday's high of 23,175. A move above the same will signal extension of the last two weeks pullback and open upside towards 23,500 levels in the coming sessions being the 50% retracement of the entire recent decline from 24,774 to 22,180. "However, failure to reclaim Monday's high would signal corrective consolidation in the range of 23,175 to 22,500. Within the consolidation 22,800 is the immediate support area being recent breakout area.
While 22,500-22,600 being the major support area from short term prospective," said Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking. "For day traders, 22,800-22,750/73,600-73,500 would act as key trend zones. As long as the market trades above these levels, the pullback trend is likely to continue. On the downside, the market could retest the 22,600–22,500/73,600–73,300 zone if it break below 22,750/73,500.
On the other hand, if the market moves above 23,200/74800, sentiment could improve, and it could move towards 23,300–23,500/75100–75500," said Shrikant Chouhan, Head Equity Research, Kotak Neo. 4) India VIX rises 7.5% India VIX, the volatility gauge, rose 7.5% on October 21, which indicates market participants expect short-term pressure.
