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An evening walk down D-St: Weak macro data, earnings push Nifty below 100-EMA

May 13
18:06 2019

After consolidating around 100-days exponential moving average (EMA), traders were confident that Nifty50 should be able to hold on to this level on May 13 but late hour selling pushed Nifty in the red for the 9th consecutive days in a row.

The index posted its longest losing streak for the first time in the last 8 years, CNBC-TV18 data quoted. The NSE Advance-Decline Ratio at 1:4.

The index broke below its crucial 100-days exponential moving average (EMA) placed at 11,253 to form a bearish candle. The next support could now be placed at its 200-days EMA placed around 11,035.

The final tally on D-Street – the S&P BSE Sensex plunged 372 points to close at 37,090 while the Nifty50 fell 130 points to close at 11,148.

In terms of sectors, the Nifty PSU Bank lost 5 percent, followed by Nifty Pharma which lost 4.3 percent, and the Nifty Media was down by 3.7 percent.

The broader market underperformed the benchmark index. The Nifty Midcap index was down 2.69 percent while the Nifty Midcap index dropped 2.1 percent.

More than 200 companies on the NSE and over 300 companies on the BSE hit fresh 52-week low which includes names like Eicher Motors, M&M, Biocon, Sun Pharma, Wockhardt, Dabur India, Cadila Healthcare, etc. among others.

What led to the fall in markets?

Indian markets witnessed a rangebound trade in the first half of the trading session but bears soon took control and pushed the index in deep red in the second half.

Four factors which weighed on sentiment include a) on-going tensions between the US & China kept investors on the edge across Asian markets, b) weak economic data as well as, and c) disappointing results from India Inc.

d) In terms of technicals, a break below 100-days exponential moving averages followed by 11200 levels added to selling pressure. The next target for the index is placed around its 100-days EMA placed around 11035 levels. The near term resistance zone, on the other hand, shifts lower to 11280-11300.

“Markets slumped sharply lower and lost over a percent, continuing its corrective phase. Weak IIP data and the escalating trade war between the US and China were weighing on the sentiment from the beginning,” Jayant Manglik, President – Retail Distribution, Religare Broking Ltd told Moneycontrol.

“Though the benchmark traded range bound for most of the session sharp decline in last hour pushed the bulls completely on the back foot. Almost all the sectoral indices felt the pressure wherein pharma and PSU banks lost maximum,” he said.

Manglik further added that considering the volatility, we suggest preferring options strategies instead of naked trades in the future segment.

Stocks in news:

Eicher Motors declined 8 percent as CLSA slashed its target price post Q4 results to Rs 22500 from Rs 23900 earlier with outperform rating.

Shares of Sun Pharmaceuticals dived 21 percent intra-day, just days after more than 40 states in the US filed a lawsuit alleging drug manufacturers of artificially inflating prices, CNBC-TV18 reported. The stock closed 9.3% lower at 396.85. It hit a fresh 52-week low of 350.40 on the BSE.

ITC: ITC closes below 200-DMA as Q4 margin misses estimates. The operating profit or Earnings before interest, tax, depreciation, and amortization (EBITDA) of the company was at Rs 4,572 crore, while margin was at 38.1%, compared to CNBC-TV18 poll of 39.2%.

Cadila Healthcare touched a 52-week low of Rs 265.95, falling over 7 percent after broking firm CLSA downgraded the stocks to sell from buy, and cut target to Rs 250 from Rs 430 per share.

The share price of Delta Corp touched a 52-week low of Rs 182 on the back of news report of GST evasion. The stock closed 12.6 percent lower at Rs 186.40.

Global Markets:

Asian shares declined on Monday amid uncertainty on the US-China trade front after tariffs on Chinese goods were raised last Friday. The Shanghai Composite tumbled 1.21% to close at 2,903.71 and the Shenzhen component fell 1.43% to finish its trading day at 9,103.36.

The Nikkei 225 in Japan declined 0.72% to close at 21,191.28. In South Korea, the Kospi fell 1.38% to close at 2,079.01, while Australia’s ASX 200 shed 0.21% to finish its trading day Down Under at 6,297.60.

Markets in Europe traded lower on Monday with investors continuing to monitor trade developments between the US and China.

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