Taking Stock: Weak global cues push Nifty below 16,500; India VIX up over 8%

Market Outlook

Weak global cues pushed benchmark indices lower on August 20. The S&P BSE Sensex declined 300 points to 55,329, while the Nifty50 ended 118 points down at 16,450.

Asian shares extended losses on a strong dollar, which is sitting at a nine-month high, after the prospect of the Federal Reserve cutting back bond purchases spooked investors, a Reuters report said.

In India, the small and midcap indices also took a beating. The BSE midcap index closed 1.9 percent down, while the smallcap index ended 1.8 percent lower.

Volatility also picked up, with India VIX moving up 8.64 percent from 12.90 to 14.01 levels. A sudden spurt in volatility caused profit-booking declines in the market.

“Bears took control of today’s volatile session as weak cues from the global markets triggered selling across all sectors except FMCG,” Vinod Nair, Head of Research at Geojit Financial Services, said.

Fast-spreading Delta virus, the Fed’s taper plans, and China’s regulatory crackdown forced global markets to trade with cuts, he said. Though the selling was broad-based, metal stocks were most affected due to a sharp drop in iron ore futures across the world, Jain said.

Stocks & Sectors

Sectorally, buying was seen in FMCG stocks, while selling pressure was visible in metals, realty, public sector and industrials.

“On the sectoral front, the metal index tumbled over 6 percent due to fall in steel and copper prices globally, followed by pharma, realty, and PSU banks. FMCG stocks climb as the market takes a defensive stance,” Mohit Nigam, Head-PMS, Hem Securities, said.

Long buildup was seen in stocks like Marico, Berger Paints and Britannia Industries. Short Buildup was seen in stocks like PI Industries, Apollo Tyres, and Jindal Steel.

More than 170 stocks, including HUL, MindTree, Britannia Industries, Fortis Healthcare and Nestle India, hit a fresh 52-week high.

Here’s what investors should do on August 23:

The Nifty50 closed in the red for the second consecutive day in a row. It formed a small-bodied candle on the daily charts and a bearish candle on the daily charts.

The index closed below its crucial 5-day exponential moving average placed at 16,495 on the daily charts.

“VIX is at the highest daily close of last 39 trading sessions, indicating that some volatile cues could be seen in the market. It formed a bullish candle on the daily scale but a bearish candle similar to a shooting star on the weekly frame,” Chandan Taparia, Vice President | Analyst-Derivatives, Motilal Oswal Financial Services Limited, said.

“It negated its higher highs-higher lows formation of the last five sessions. Now it has to continue to hold above 16,450-16,500 zones to extend the momentum towards 16,600 and 16,700 zones, while on the downside, support is seen at 16,350 and 16,200 levels,” he said.

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