Sensex snaps 3-days of gains, ends down 394 points; ICICI Bank, HDFC among losers

Snapping three straight days of gains, domestic equity benchmarks on Thursday ended in the red amid weak global cues. Sensex closed 394 points lower at 38,220 and Nifty fell 96 points to 11,312. Yesterday, Sensex ended 86 points higher at 38,614 and Nifty gained 23 points to 11,408. Markets globally were trading largely bearish today after the Federal Reserve raised concerns on the US economic recovery from the devastating effects of the pandemic.  

ICICI Bank, followed by IndusInd Bank, HDFC, ITC, Asian Paints and Titan were among the top losers today. On the other hand, NTPC, PowerGrid, Sun Pharma and Infosys were among the gainers. Sectorally, gains in pharma, metal, media and realty were capped by over 1% loss in banking and financial indices. Besides this, FMCG, auto and IT also closed in the negative territory with marginal losses.

Commenting on the market's fall today, S Ranganathan, Head of Research at LKP Securities said: "The day began weak on the back of global cues and indices lost ground consistently through the session even as select PSU stocks held firmly in the green. Small & Midcap names though continued their upward march today as HNI and Retail Investors evinced keen interest in many such stocks."

Global markets

Asian stocks fell on Thursday after China kept its benchmark lending rate on hold, while Wall Street finished lower on Wednesday on the Federal Reserve's cautious stance. Where European markets opened almost 1% lower, indices in Taiwan and Kospi ended 3% lower, followed by over 1% drop in China, Hong Kong and Japan.

Markets' attention has largely been reeling around the outcome of minutes from the US Federal Reserve's policy meeting held on July 28 and 29. Federal Open Market Committee members highlighted uncertainties over the US recovery and said additional easing may be needed because a rebound in employment was already slowing. As per the meeting minutes, policymakers agreed that the ongoing situation surrounding the coronavirus pandemic could "weigh heavily on economic activity, employment, and inflation in the near term and was posing considerable risks to the economic outlook over the medium term."

Commenting on today's bearish trend, Vinod Nair, Head of Research at Geojit Financial Services said: "Indian indices along with global markets traded in the red today, on the back of US Fed reserve's grim July meeting minutes. The Fed reserve cast doubts on the nascent recovery of the labour market seen in the previous months and its sustainability. Markets, globally, were banking on expectations of a steady recovery in the major economies and the consequent return to normalcy for businesses. Although there was nothing new in the minutes, markets reacted negatively to it."

Worldwide, there are 225 lakh confirmed cases and 7.91 lakh deaths from COVID-19 outbreak. Meanwhile, the death toll in India crossed 54,000 mark and total coronavirus stood at 28.37 lakh as of Thursday.

Technical insights

As per Nifty technicals, the benchmark closed lower to its immediate support range of 11350-11300. The index is in a corrective move and can find resistance from 11,341 to 10,882 levels. For the upcoming sessions, traders will keep an eye on the minutes of the RBI monetary policy panel meeting which will be released today. The foreign exchange reserves data will be released on August 21.

Commenting on Nifty's technicals, Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said: "The support of 11200 has been respected upon the closing of the Nifty. The bias is still on the upside and we could continue waiting for a 11500 target. That target would get negated only if 11100-11200 breaks upon closing."Share Market Highlights: Sensex ends 394 points lower, Nifty at 11,312; Axis Bank, ICICI Bank top laggardsGold price falls for second day; silver rates at Rs 67,500