Why Sensex today suffered its biggest loss in 3 weeks


Indian markets fell sharply after grim economic outlook from the US Federal Reserve triggered a selloff in global equity markets. The Sensex fell over 700 points to 33,538 - its biggest loss in three weeks - while Nifty fell over 2% to 9,902. The Fed predicted the US economy would shrink 6.5% in 2020 and unemployment would still be at 9.3% at year's end, denting optimism of a quick economic recovery that had pushed global equities to highest level since February.
Market sentiment also took a hit as new coronavirus infections continued to rise in India with cases now near 2.9 lakh.




"The statement from the US Fed that recovery from pandemic would take longer than expected triggered a weak start which worsened with a deep cut in the European indices in the latter half," said Ajit Mishra, VP - Research, Religare Broking Ltd.
Indian markets also extended their losses after Supreme Court asked telecom operators to file replies on a roadmap for payment of government dues.
The Nifty banking index fell 2.72% following the hearing as many banks have large exposure to the telecom sector.
HDFC Bank, ICICI Bank and Kotak Mahindra Bank were the top drags, falling between 2.3% and 3.3%. The country's top lender State Bank of India ended down 5.62%.
Shares of telecom operators Bharti Airtel fell 2.7%, while Vodafone Idea tumbled 14.75%.
What analysts said on today's market action:
Vishal Wagh, Research Head, Bonanza Portfolio
"Going forward, major support of 10040 is broken same will work as resistance and on downside 9650 will be support for Nifty. Whereas, Banknifty will find support around 20300 below which a stiff fall can be seen and resistance near to 21680."
Vinod Nair, Head of Research at Geojit Financial Services.
"The markets traded negative today on the back of data emerging globally and domestically. The awaited FOMC announcement drove the negativity in the international markets as the Fed diminished hopes of a quick recovery in the US economy, with their outlook. Major global indices were mostly in the negative. With infections continuing to remain high, the markets are also worried about any additional lockdown measures being imposed. This could mean offsetting the optimism of the last 2 weeks, where investors were banking on the economy restarting fully. Markets are in sync with global cues and with Nifty closing below the 10000 mark, investors are advised to be cautious."
Ajit Mishra, VP - Research, Religare Broking Ltd.
"The positioning of the global markets will continue to dictate the market trend ahead also. Nifty should hold 9850 for any rebound else profit taking would continue. We suggest limiting the leveraged trades and keeping the existing positions hedged."
(With Agency Inputs)





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