Stock market closing: Massacre on D-Street as Sensex plunges over 2,000 points, Nifty dips by over 2%

Sensex and Nifty witnessed an intense bloodbath today, with Sensex falling a staggering 2,222.55 points to close at 78,759.40, well below the 80,000 mark it had recently breached. Nifty followed suit, tanking 2.7% to close at 24,049.95 points on Monday. Japan's Nikkei also suffered its worst losses since 1987, dipping by over 4,000 points to close the day on August 5th, 2024.

Hindustan Unilever, which was up by 1.02%, was amidst the few stocks that gained during the day, along with Tata Consumers, Nestle, Britannia and HDFC Life. Most stocks closed the day in the red, with Tata Motors dipping by 7.40%, ONGC tanking by 6.39%, and Adani Ports, Tata Steel and Hindalco dipping by over 5% each.

Out of the 2,856 stocks traded during the day, only 331 saw advances, while 2,451 declined. While 76 stocks hit their 52-week high prices, 61 stocks also hit their 52-week low. 61 stocks remained in the upper circuit during the day, while 319 stocks hit the lower circuit during today's trading session.

Ajit Mishra – SVP, Research, Religare Broking Ltd noted that markets plunged sharply today, losing over 2.5% due to weak global cues. All key sectors declined in line with the benchmark, with realty, metal, and energy being the top losers. The broader indices also suffered, losing between 3.6% and 4.6%. While Nifty Small cap 100 dipped by 4.57%, midcap 100 slipped by 3.55%. Nifty micro cap dipped by 4.49%.

"Going forward, we may see continued volatile swings with a negative bias due to multiple global headwinds, including the unwinding of Yen carry trades, recession fears in the US, and escalating tensions in the Middle East. On the index front, we are eyeing the 23,250-23,400 zone as key support for Nifty, while the 24,500-24,700 zone will act as resistance in the event of a rebound. Traders should align their positions accordingly and prefer a hedged approach. Investors, on the other hand, should view this correction as an opportunity to accumulate quality stocks on dip", Mishra continued.

Aditya Gaggar, director of Progressive Shares that while Nifty50 managed to defend its psychological support of 24,000 and ended the session at 24,055.60 with a loss of 662.10 points, all the sectors ended the day in red with metal and media being the underperformers.

"Broader markets have witnessed a steeper correction as mid and small caps corrected by 3.55% & 4.57% respectively. With a major bearish gap zone, the Index has formed a big red candle which clearly indicates the control of the bears. In the lower time frame, an extremely oversold condition was observed, and thus, a short-term pullback is warranted. The immediate support is placed at 23,860 while on the higher side, 24,250 will be considered a hurdle", continued Gaggar.

Amidst broad market indices, India VIX climbed up a staggering 42.23% during the day, while all mid caps and small cap indices shed between 2-4% today. While all sectoral indices closed the day in red, only FMCG managed to contain its losses by dipping only 0.32%, PSU bank (down by 4.09%), media (down by 4.58%) and metal (down by 4.85%) were the leading laggards.

Shrikant Chouhan, Head Equity Research, Kotak Securities highlighted that amongst global macros, oil prices remained near eight-month lows today, as recession fears in the United States, the world's largest oil consumer, outweighed concerns that rising tensions in the Middle East might disrupt supplies from the key production region.

"Recent US economic data presented a mixed outlook. Average hourly earnings increased by 0.2%, slightly below the expected 0.3%. Non-farm payrolls rose by just 1,14,000, significantly below the anticipated 1,76,000, and the unemployment rate increased to 4.3%, the highest since November 2021. In this context, the upcoming Fed commentary will be crucial for driving the market sentiment", he said.

"However, the current market texture is weak and volatile but due to temporary oversold conditions, we could expect one intraday pullback rally. For the day traders now, 24,000/78,500 would be the immediate reference point. Above the same, we could expect intraday pullback up to 24,150-24,250/79,000-79,300. On the flip side, below 24,000/78,500 the selling pressure is likely accelerate. Below the same, it could retest the level of 23,900/78,300. Further down side may also continue which could drag the index till 23,800/78,000", noted Chouhan.

Rajesh Bhosale, Equity Technical Analyst, Angel One advises traders to avoid attempting to catch the bottom in the short term and should use any rebounds to reduce long positions.

"One of the key highlights of the day was India VIX spiked by 42% to surpass the 20 mark, expect the Volatility to remain on the higher side, so it is advisable to manage risk carefully and stay informed about global developments, as they are likely to influence our markets in the near term", he explained.