Markets crash over 1% amid weak global cues, US rate hike concerns; IT stocks take pounding

The benchmark indices crashed at last day of trading this week. After 3 days of rise, investors liquidated their holdings as they fear the market could correct going ahead. The market had a weak start and selling accentuated throughout the session as after making an intraday high at 17,454.75 level index closed the session at with a loss of 231.10 points. The rising US inflation has raised concerns that the Federal Reserve could soon initiate its rate hike decision, which created a lot of uncertainty among global investors, including India.

All the sectoral indices ended in the red with IT and realty indices down 2 percent each. BSE Midcap and Smallcap indices fell nearly 2 percent each.

At close, the Sensex was down 773.11 points or 1.31 percent at 58,152.92. The broader Nifty was down 231 points or 1.31 percent at 17,374.80. About 896 shares have advanced, 2318 shares declined, and 105 shares are unchanged.

IT, infra, banking stocks slump

There was heavy selling pressure in IT, infra and banking stocks. Tech Mahindra slumped 2.94 percent to Rs 1424.35. Infosys slipped 2.71 percent to Rs 1721. HCL Technologies dipped 2.16 percent to Rs 1164.40. Wipro fell 2.07 percent to Rs 561.65 and TCS closed 2 percent down at Rs 3695.60.

Among banking stocks, State Bank of India was the biggest loser with over two percent of slump. SBI dipped 2.06 percent to Rs 529.30. Kotak Bank fell 2.04 percent to Rs 1828.95. ICICI Bank slipped 1.76 percent to Rs 791.05. UltraTech Cement 2.16 percent down at Rs 7310; HDFC 2.01 percent down at Rs 2426.60; Power Grid Corporation 1.98 percent down at Rs 207.75 and Titan 1.97 percent down at Rs 2442.15 were among the major Sensex losers.

Only five of 30 scrips that are part of the Sensex closed in green. IndusInd Bank rose 0.94 per cent to Rs 981.95. Tata Steel rose 0.52 percent to Rs 1254.75. NTPC, Mahindra & Mahindra, and ITC also closed in the positive.

Markets likely to maintain non-directional activity

Technically, the index is witnessing non directional activity near the 50 day SMA. However, on daily and weekly charts, it is holding higher bottom formation but at the same is consistently facing resistance at 20 day SMA. Hence, the market is likely to maintain non directional activity in the near future, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. The immediate support would be 17,300-17,250 while 17,600 and 17,700 would act as a crucial hurdle for the bulls. Meanwhile, after a short term correction the Bank Nifty held the level of 20 day SMA. The structure suggests 38200  or 20 day SMA and 38000 would be the sacrosanct support for the index, and above the same uptrend momentum is likely to continue till 39,500-40,000, he added.

Mohit Nigam, Head - PMS, Hem Securities said, "On the technical front 17,250 and 17,450 are immediate support and resistance in Nifty 50 respectively. For Bank Nifty 38,200 and 38,800 are immediate support and resistance respectively."

The rising US inflation has raised concerns that the Federal Reserve could soon initiate its rate hike decision, which created a lot of uncertainty among the global investors, including India. Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd, said, "Technically, the index is witnessing non directional activity near the 50 day SMA. However, on daily and weekly charts, it is holding higher bottom formation but at the same is consistently facing resistance at 20 day SMA. Hence, the market is likely to maintain non directional activity in the near future."

Palak Kothari, Research Associate, Choice Broking said, "On an Hourly Chart, the index has been trading below 21*50-HMA with the negative crossover which suggests weakness for next session. Moreover, the daily momentum indicator Stochastic as well MACD is also trading with negative crossover which adds weakness in prices. At present, Bank nifty has support at 38,000 levels while resistance at 39,000 levels."

Nifty falls 0.81% after a week of gains

Deepak Jasani, Head of Retail Research, HDFC Securities said, Nifty fell on a weekly basis (down 0.81 percent) after a week of gains. Sectorally on a weekly basis, Metals were the largest gainers while Realty, FMCG and IT indices fell the most. The week gone by saw the RBI MPC coming out more dovish than expected monetary policy while the US January inflation touched a 40 year high. Fears of a faster rate rise by the US Fed led to a sell-off across the markets on Thursday and this could continue for some time.

FIIs remain net sellers

Foreign institutional investors (FIIs) remained net sellers in the capital market, offloading shares worth Rs 1,732.58 crore on Thursday, according to stock exchange data.

Week ahead for stock markets

Next week could be the last week of the Q3 corporate results in India. Nifty is showing hesitation on building up on recent gains, said Jasani. This could be an early hint of more weakness in the offing. Nifty could remain in the 17,214-17,554 band and breach of either level could lead to accelerated move in that direction.

Apart from the global cues that might dictate the near-term trend, strong leadership from major sectors could help to gain momentum in the domestic market, said Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One. Going forward, looking at the technical structure and the sentiments among the market participants, indecisiveness could be sensed as the range is getting narrower over the period. There might be some outbursts in the near term, and hence stock selective approach should be taken in the market for the coming week, he cautioned.

Asian markets end in red

In other Asian markets, bourses in Hong Kong, Seoul and Shanghai ended with losses, while Tokyo closed in the green.

European shares fall

European shares fell on Friday, tracking a sell-off in global markets after red-hot US inflation data fuelled bets on a more aggressive Federal Reserve rate hike, though dovish comments from the European Central Bank chief stemmed some losses, Reuters said. The pan-European STOXX 600 dropped 1.0 percent after data showed US consumer prices saw the biggest rise in 40 years in January, and St. Louis Federal Reserve Bank President James Bullard said the print had made him "dramatically" more hawkish.

Strong dollar drags on currencies

Most emerging market stocks and currencies dropped on Friday after data showing US inflation raised bets for an even more hawkish Federal Reserve, while Russia's rouble edged higher ahead of a central bank interest rate decision.

MSCI's index of emerging market currencies and stocks fell on Friday but was still on track to end its second consecutive week higher, Reuters said. Data analysed by BofA showed emerging market equity funds had enjoyed a seventh straight week of inflows, sucking in $5.3 billion in the week to Wednesday.