Sensex plunges 2,002 points into historically low and global PMI signals

Mumbai: A global liquidation due to the spread of the coronavirus, new trade tensions between the United States and China, sharp declines in the profits of several of the major Indian corporations, and a historic drop in Indian manufacturing activities combined to boost the sensex down 6% on Monday. The 2,002-point drop to 31,715 at the close of trading on Monday was the fourth-biggest loss in a single session of the index.

News of the extension of the blockade across the country, which will further affect economic activity, also influenced investor sentiment, the players said. On the NSE, the Nifty closed at 9,294, 567 points less or 5.7% on the day.

The fall of the day also left poorer investors at Rs 5.8 lakh crore with the market capitalization of BSE now at Rs 122.6 lakh crore. The data at the end of the session showed that both domestic and foreign institutions were sellers with FPIs that recorded a net outflow of Rs 1,374 million rupees, while national funds were net sellers of Rs 1,662 million rupees.

According to head of securities (retail research) Deepak Jasani, Monday's dip in Indian scones could be attributed to weakness in world markets during the past two trading sessions, poor macro data locally, the latest trade dispute between states United and China and poor corporate earnings. The drop in world markets could also be due to the dispute between senior US and Chinese officials over the origin of the coronavirus. This fueled fears of a new trade war, Jasani wrote in a note.

In addition, factory data from around the world points to tough times ahead for the global economy, which also pushed investors to be cautious. Financials and IT stocks were hammered the most with 28 of the 30 sensex constituents closing in the red, BSE data showed. HDFC ICICI Bank and Infosys together contributed to the sensex's fall, while gains in Bharti Airtel cushioned it, although marginally. The selloff in stocks also had a negative impact on the forex market with the rupee closing 62 paise weaker at 75.72 to the dollar, market players said.Technically, continuous closes below the 9,400 level would be a sign of weakness for the Nifty, chartists said . And a hold below 9,400 zones (for Nifty) could see a correction towards 9,000, and then 8,800 zones in the coming days. On the upside, immediate resistance is now placed at 9,600 and then around 9,889 levels, a technical note from Motilal Oswal Financial Services said.