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Sensex drops 894 points, Nifty closes below 11,000

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Sensex drops 894 points, Nifty closes below 11,000
Vishav - 06 March 2020

Due to a combination of global and domestic cues, Indian stock markets witnessed yet another major setback on Friday suffering sharp losses in early trade with BSE’s Sensex opening around 1450 points down in the morning, before recovering a little. It closed 894 points down at 37,576 points after recovering from the day’s low at 37,011 points. Nifty closed 280 points down at 10,989 points. At day’s low, it was trading at 10,827 points.

This was the second Friday in a row when the stock markets nosedived in such a fashion. While last Friday’s shock was mainly due to the Coronavirus concerns, only this time it was a combination, the pandemic fear coupled with domestic factors primarily developments around YES Bank which led to a sharp sell-off in banking space. Apart from YES Bank, the sharp sell-off in banking space affected SBI the most after it, in an exchange filing last night, informed that it was exploring investment opportunity in YES Bank.

The markets opened on a negative note owing to reports of SBI and LIC picking stake in the troubled private sector lender YES Bank. While BSE Sensex shed almost 1500 points at opening, NSE Nifty slipped below 11,000 levels. However, reassurance by the Finance Minister, followed by her meeting with SBI Chairperson, led to some recovery as trading progressed. After the RBI suspended Yes Bank’s board and capped withdrawal limit to Rs 50,000 for the one-month period, its shares tanked and closed at Rs 16, down 56 per cent. SBI also suffered losses and closed at Rs 270, down by 6.5 per cent.

Shrikant Chouhan, Senior Vice-President, Equity Technical Research, Kotak Securities, said that the short term trend in the marker was weak, and 10,900 (Nifty) should act as an important support for the market, trading below which could trigger one more leg of correction wave till 10800- 10750.

“The market witnessed huge selling pressure on the last day of the week. Today, the nifty opened lower with a gap of more than 300 points and made a panic intraday low of 11,827.40. However, it trimmed some losses in the second half of the day and managed to close above today’s opening level. On the global front, all major indices were trading lower and have lost over 1 per cent. The updates on spread of Coronavirus cases would be the only biggest trigger for the next few trading sessions,” he said.

“Whereas, updates on resolution plan for Yes Bank could be an important trigger on domestic front. Technically, the short term trend is weak, and 10900 should act as an important support for the market. Trading above the same we can expect quick relief rally up to 11200-11250 however, trading below 10900 could trigger one more leg of correction wave till 10800- 10750. The market is highly volatile and will remain the same for next few trading sessions,” he added.

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