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Published on 9/03/2020 6:18:37 PM | Source: Motilal Oswal Services Ltd

Daily Market Commentary 09 March 2020 by Mr. Siddhartha Khemka, Motilal Oswal

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Below is the Views On Daily Market Commentary by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Indian Equity market suffered its biggest loss since August 2015, falling ~5% on the back of global sell off seen due to rising coronavirus and failed OPEC meeting. The BSE Sensex plummeted 2400 points before ending 1942 points lower at 35,635 (-5.2%). Nifty50 index fell more than 700 points intraday and closed 538 points lower at 10,451 (-4.9%). The broader market mirrored benchmarks, with both Nifty Midcap 100 and Nifty Smallcap 100 down 4.9%/5.3%. All the sectors ended in red with Metals being the biggest loser, down 7.7%. IT, Media and Banks were down 5-7% while others were down 3-4%. Volatility index India VIX rose 21% to 31 levels. Indian markets followed the global market meltdown which was triggered by rapidly-spreading coronavirus and free fall in crude oil prices.

Crude oil prices plunged after Saudi Arabia launched a price war post the failure to strike a deal among major producers to cut production and support energy prices. Brent crude futures fell by as much as $14 (-31.5%), to $31 a barrel, which was the biggest drop since January 1991 and the lowest since February, 2016. On the currency front, the Indian rupee depreciated 13 paise to 74.09 per US dollar.

Indian markets have fallen almost 16% from its peak, following its global peers which have fallen anywhere between 13% to 20%. The relentless FII selling in the last 2 weeks has added to the overall downtrend. There was panic globally as fears of rising cases of coronavirus in countries like Italy and US made investors nervous. This has led to worries over a prolonged global economic slowdown. Bond yield have fallen globally with US 10Y touching an all-time low of 0.32%. US S&P 500 VIX crossed 50 on Friday, while India VIX touched 34 levels – both indicating of the volatile times expected ahead. Until we see a semblance of normalcy returning, we would advise traders to avoid bottom fishing and not to try ‘catching a falling knife’.

Technically, Nifty breached its major support of 10650. If the index sustains below the same, it may continue to fall towards 10200 and then 10000 mark. Major resistance is also shifting lower to 10650- 10750 levels. 

 

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