The benchmark index crashed badly on the last trading day of the week. After a gap-down opening, the index continued the fall and retreated almost 3 percent in a day to close at 17,026.50 levels. BankNifty has drifted more than 3.5 percent, settling at 36,025.50 levels.
At close, the Sensex was down 1,687.94 points or 2.87 percent at 57,107.15. The Nifty was down 509.80 points or 2.91 percent at 17,026.50. About 964 shares have advanced, 2163 shares declined, and 80 shares are unchanged.
The major losers on the Nifty were JSW Steel, Hindalco Industries, Tata Motors, IndusInd Bank and Adani Ports. Cipla, Dr Reddy's Labs, Divis Labs, Nestle and TCS were among the gainers.
Gaurav Udani, CEO & Founder, ThincRedBlu Securities said, "Nifty made a strong bearish bay today. It closed at 17,010 down by 565 points. On Monday we may see a further continuation to this down trend. The next support range for Nifty is between 16,700-16,800 for where we can see a bounce back to 17,200. Traders are suggested to exit long positions on every pull back and not to initiate any new long positions till we see a bullish confirmation on Nifty."
The stock markets saw a sharp correction this week amid renewed concerns pertaining to COVID. BSE Sensex and Nifty declined close to 4 percent this week and are down by 8 percent from their highs. Correction in the market was broad-based with BSE Midcap and BSE Smallcap index also witnessing a decline, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.
"Amongst sectors, the BSE Auto index was a major underperformer having declined more than 7 percent this week. BSE Realty, BSE Bankex, and BSE Capital goods index were other underperformers, declining in excess of 4 percent during the week. Despite weakness in the equity markets, the BSE Pharma index saw positive returns. The new variant of COVID is presenting challenges in the form of lockdowns and travel bans. Apart from covid related concerns, inflation remains a worry for countries across the globe. FII’s have been net sellers this week. Equity markets in the near-term will closely follow the impact of new covid variant, inflation data, and Central Bank policies," Chouhan said.
Sachin Gupta, AVP-Research, Choice Broking said, "On the sectoral front, except Pharma indexes, the rest of the indices have closed in negative territory with heavy selling pressure. Pharma stocks like Cipla, Dr Reddy, and Divis Lab were the top gainers while JSW Steel, Hindalco, Tata Motors, IndusInd Bank were the prime laggards. Technically, the index has continued the breakdown of the Head and Shoulder pattern after retesting the neckline, which indicates bearishness in the index. Moreover, the index has moved below 100 days SMA and also formed a Bearish Marubozu candle on the daily chart. However, the momentum indicator RSI and Stochastic has been trading at oversold territory. At present, The Nifty has support at 16,700 levels while resistance at 17,300 levels. On the other hand, Bank Nifty has support at 33,480 levels and resistance at 36,600 levels.
Parth Nyati, Founder, Tradingo, said, "It was expected that today we could have a dull day amid a holiday in the US market but surprisingly we wake up with negative cues of a new COVID variant from South Africa that led to black Friday on global markets. Indian markets that were already underperforming joined the global market mayhem where Nifty and Sensex lost about 3 percent in a day. "
FIIs' selling is a key concern for the Indian equity market because they are selling relentlessly in our market for the last many days, Nyati said. The major pressure was seen in FIIs' favorite large-cap names therefore we can again expect a large selling figure by FIIs in today's trading session.
"Banknifty is underperforming and witnessing a vertical fall. However, it has come near its 200-DMA which is currently placed at 35,700 level therefore we need to see its behavior near 200-DMA; below this, it is vulnerable for further weakness towards 35,000/34,000 levels. On the upside, 37,000 will act as a strong resistance," Nyati added.
Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities Ltd, said, "On daily charts, the index has broken the important support level of 17,200 and closed below the same. While the short term formation is weak, a quick pullback rally is not ruled out if the Nifty succeeds to trade above the 100 day SMA. For day traders, 17,150 or 100-day SMA would be the immediate hurdle above the same. On the flip side, trading below 17,150, the index could decline up to 16,900-16,750 levels. Contra traders can take a long bet near 16,750 with a strict support stop loss at 16,625. Meanwhile, the Bank Nifty closed below the 100 day SMA which is broadly negative. For the index, 37,000 and 37,700 could act as important resistance levels in the short run."
Deepak Jasani, Head of Retail Research, HDFC Securities, said, "Stock markets nosedived across the globe on Friday, heading for their largest weekly drop in almost two months, as a new coronavirus variant sparked concerns. The scare sent investors scurrying to the safety of bonds, the yen and the Swiss franc. One view is that due to the thin liquidity levels in Asia trading as a consequence of the US holiday the reaction does appear to be outsized. Asian stock markets sank Friday after some European countries tightened curbs on travel and business following a surge in coronavirus infections and South Africa reported a new variant.
"On a weekly basis, Nifty fell a massive 4.16 percent, the highest since January 2021. Nifty keeps facing selling pressure on every rise and is making new lows. Advance decline ratio is deeply in the negative. Nifty now has support from 16,722 while 17,269-17,326 band could be the resistance."
