Investors fear Indo-US spat is new market risk

The market on Monday plunged over 491 points, recording on losses for a fourth session in a row, amid investors fearing that Indo-US import tariff tussle might open a new front in global trade war. Likewise, the NSE gauge slipped over 151 points to close below the 11,700-mark.

Besides, fresh geopolitical tensions in the Middle East and concerns over the advancement of monsoon also unnerved market participants. The BSE gauge settled 491.28 points, or 1.25 per cent, lower at 38,960.79. The index hit an intra-day low of 38,911.49 and a high of 39,540.42.

Similarly, the broader NSE Nifty cracked 151.15 points, or 1.28 per cent, to close at 11,672.15. During the day, the index touched a low of 11,657.75 and a high of 11,844.05.

Over the past four sessions, the Sensex has lost 796.02 points or 2 per cent. Sectorally, BSE metal was the worst hit, losing over 3 per cent, while energy index fell over 2 per cent. The broader BSE Mid-Cap and Small-Cap indices followed benchmarks, dropping up to 1.35 per cent.

Technical View

Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking, said, "It was certainly not the kind of start for the week, most of the traders would have wished for. There was sustained selling seen throughout the day and importantly, we could see broad based participation in this decline, which generally does not bode well for the bulls. We have slipped below the key support of 11,779 and extended the correction towards 11,650."

"On hourly chart, we can see a formation of bullish 'Wolfe Wave' pattern and as per the requirement, 161 per cent retracement of the recent up move coincides around 11,630 - 11,610. Going ahead, we will not be surprised to see this fall getting arrested around the mentioned support zone. Hence, one should avoid fresh shorting now and should be prepared with potential candidates which may give decent relief moves," he said.

Market View

According to analysts, the markets had rough day, as stocks have been finding it difficult to sustain at elevated levels on the back of muted corporate earnings, slow monsoon season, continuous corporate defaults and developing concerns of India-US trade disagreements.

Jagannadham Thunuguntla, Sr. VP and Head of Research (Wealth), Centrum Broking, said, "To change the market sentiment, now lot depends on Union Budget of new finance minister though she has to achieve the take-off with short runway of just 30-35 days post assuming her role. Markets will welcome if Budget can offer any fiscal respite to stimulate the economy as monetary policy couldn't kindle economy due to lack of transmission."

Weak global cues combined with feeble domestic data were weighing on the sentiment from the beginning. It gradually drifted lower as the day progressed and settled around the day's low. All the sectoral indices traded in line with the benchmark index and ended lower.