Market Movers: Banks bleed, IT shines; 116 stocks ‘blink’ sell

MUMBAI: A continuous decline in financial stocks and Reliance Industries weighed heavily on the benchmark equity indices which dropped for the fourth straight session on Tuesday, while IT sector stood out with sector leader Tata Consultancy Services (TCS) hitting a record high.

Benchmark Nifty formed a Bearish Belt Hold-like candle on the daily chart, and has been forming lower highs lower lows for two days, suggesting a downward shift in support levels. A close below 50-day exponential moving average (EMA) has just added to the negative outlook.

Mid and small cap stocks were battered more than the frontline indices, in a session that saw Sensex drop 300 points to close at 37,734 points, while peer Nifty dropped 97 points to 11,154 points.

Meanwhile, an offer for sale (OFS) at a steep discount halted the rally for GMM Pfaudler, which tumbled 10 per cent in reaction.

With market changing direction, the sentiment is likely to stay subdued in the near term.

“Doubts about the timing of a global economic recovery emerged, following talks of further restrictions to contain a resurgence in virus infections around the world, especially in Europe. This uncertainty has also hit the Indian markets,” said Vinod Nair, head of research at Geojit Financial Services.

“Markets seem to be consolidating and taking stock of the situation. Investors are advised to stay cautious,” he added.

Here is a lowdown on what happened in Tuesday’s trade:

Banking stocks hammered:
Banking stocks continued their journey southwards, with BSE Bankex declining 1 per cent. Bandhan Bank, IndusInd Bank, and Axis Bank dropped 3.50 per cent, 2.79 per cent and 2.59 per cent, respectively.

IT companies outperform:
BSE IT index was the only sectoral index to log gains as it advanced 0.91 per cent. TCS logged a new high of Rs 2,554. It pared some gains and closed 2.39 per cent higher at Rs 2,523.55.

Peer HCL Technologies rose 2.43 per cent to Rs 821.80, while Mindtree added 3.01 per cent to Rs 1,308.60.

Mid and small cap stocks tumble more:
The correction continued to be steeper for mid and small cap companies, with BSE mid and small cap indices declining 1.70 per cent and 1.61 per cent respectively. Among mid-cap stocks, Zee Entertainment Enterprises and Canara Bank dropped 6.44 per cent and 6.38 per cent, respectively. In the small cap pack, GMM Pfaudler shed 10 per cent, while Vikas WSP dropped 9.84 per cent.

Deep discount OFS hurts GMM Pfaudler:
GMM Pfaudler plunged 10 per cent to Rs 4,717 after India’s largest manufacturer of glass-lined equipment announced an offer for sale (OFS) by the promoters at a floor price of Rs 3,500, a 33.21 per cent discount to its Monday's market price of Rs 5,241 on BSE. The stock had been a strong outperformer, and is still up 152 per cent for the year to date.

Route Mobile gains traction:
After a stellar debut on Monday, Route Mobile rose 6.40 per cent to Rs 692.80 on Tuesday. Goldman Sachs and Kuwait Investment Authority had lapped up shares of Route Mobile at its debut on the bourses on Monday.

Promoter/Employee action: JSW Steel, VA Tech Wabag:
JSW Steel Employees Welfare Trust – ESOP Plan 2016 A/c sold a total of 1,16,042 shares on JSW Steel over September 17-21. The stock closed 0.17 per cent higher at Rs 271.80.

Promoter and director Subramanian Varadarajan revoked the pledge on 16,77,000 shares of VA Tech Wabag. The stock dropped 4.45 per cent to Rs 185.85.

Stocks that hit 52-week high:
A total of 89 stocks hit 52-week highs on the BSE. These included TCS, Hexaware Technologies, HKG and Avon Lifesciences, among others.

Stocks that hit lower circuit:
As many as 354 stocks hit the lower circuit on the BSE. These included Dish TV India, Adani Green Energy, GMM Pfaudler, Indiabulls Integrated Services, Reliance Infrastructure, Vikas WSP and Tejas Networks, among others.

Stocks that flash sell:
As many as 116 stocks flashed ‘sell’ signals on BSE, as they slipped below the signal line on the MACD indicator. These included Ashok Leyland, Jamna Auto Industries, Reliance Industries, Welspun Corp, Indian Energy Exchange, and Dabur India, among others.

Where is Nifty headed?
According to Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities, if Nifty drops below 11,100, it could fall to 10,900 level.

This, he said, is where the support of Fibonacci retracements and back- to-back supports of 200-day EMA at 10,850 and 200-day SMA at 10780 are placed at. “The strategy for now should be to buy on dips around 10,900 levels and sell around 11,300 levels,” he added.