Market Wrap – Nifty witnessed Bloodbath today!
The index lost about 100 points closing at 7433 (-1.36%). Major banking stocks like Union bank (-9.37%), IDBI bank (9.00%), Allahabad Bank(-8.51%), Syndicate bank (-7.83%) and others tanked 7-10%. The Pharma sector also faced the heat and Wockhart pharma (-15.90%) came forth as the biggest loser, plunging 16% lower in today’s trading session, while other select pharma stocks were down 4-6%. Other than that the steel and power sector, telecommunication and infrastructure also lost 5-7%. The FMCG sector was low with around 3-5% loss.
Such a behaviour is the result of margin calls getting triggered on derivative trading which forces the participants to close their trades and book losses, adding further pressure on the already suffering securities market.
Nifty barely spared the 52 week low of 7425 by just two points. On the intraday chart we see a broadening triangle which shows the next near support at 7350.
The international markets also added to the panic today. Shanghai slipped to a closing of -3.55% whereas the European markets are currently trading around -1.3%.
Market Wrap – CHART OF THE DAY: WOCKPHARMA
In reaction to the news of Wockhardt pharma receiving a notice from the US Food and Drugs administration regarding quality concerns , the stock has fallen nearly 16% in today’s trading session. On the chart we also see a breakout and closing below a support trendline which indicates further weakness in this stock. The RSI indicator also has been suggesting this weakness beforehand by being stubbornly below the 70 mark inspite of prices being near their highs. Such stubbornness from RSI is often an indicator of a stock topping out.
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