Stock Market: Fitch serves knockout punch

Spread the love

By S Jha

New Delhi, August 2: Indices on Wednesday sank after Fitch downgraded the US currency, with Nifty diving by 200 points and Bank Nifty shed almost 600 points. All the constituents of the Bank Nifty ended in the red, as the Fitch downgrade shook the investors’ confidence in the stability of the financial market.

The investors are wary of the bond yields in the near future, as any spike would be seen adverse to the equity market. The US currency downgrade was also seen in 2011, but the equity markets globally had soon recovered.

The foreign institutional investors led the bear charge on the market as they accounted for a net sell in the cash market of Rs 1878 crores. The domestic institutional investors accounted for just Rs 2 crores of net sell in the cash market. It may be noted that the FIIs have lately been selling in the cash market, while the DIIs are buying. It’s also part of the pattern as the DIIs generally buy into a falling market, while the FIIs buy into a rising market.

Nifty at one point during the day had dived by over 300 points in an indication of severity of the selling pressure in the equity market. At one point only three of the 50 scrips in the Nifty 50 were in the green. But the last hour value buying into the market charged a pullback, which helped the Nifty recover 100 points from the day’s low.

Going forward, the US currency downgrade may still have negative effects on the market, as the indices have broken through the support zones and they are sliding downwards gradually. While Nifty is in the retracement from the high of 19950 level, the chartists and market participants are claiming that the index still has some distance to cover.

Just six of the Nifty scrips could manage to end the day in the green, which included Divi’s Laboratory, Nestle India, Hindustan Unilever, Asian Paints, Tech Mahindra, and Ultratech Cement. However, the pharma sector continues to attract the buyers’ interest in the market, with the likes of Laurus Lab, Divi’s Lab, Kingfa, Poly Medi and others making strong gains in a bearish market. The cement companies were also in the demand on Wednesday.

Besides, Tech Mahindra ducked the bear trend, as the IT behemoth is attracting investors on the back of the company roping the top leadership of Infosys in its ranks. Auto and power sector largecaps led the fall in the market. Yet, the penny stocks from the powers sector continued to gain in the market.