Indian stock markets collapsed today as the benchmark Sensex fell 839 points amid further border tensions between India and China. The introduction of the new margin system from September 1 also weighed on the market. After collecting 543 points in the morning session and touching the 40,000 point mark, the BSE Sensex gave up all its gains to close at 38,628.29, a loss of 839.02 points or 2.13%. Likewise, the NSE Nifty accumulated 260.10 points or 2.23% to finish at 11,387.50.
Larger indices such as the BSE midcap and BSE smallcap indices fell 3.8% and 4.4% respectively.
Deepak Jasani, Head of Retail Research, HDFC Securities, said: “Volumes on the NSE have been helped tremendously by the rebalancing of MSCI volumes as the near term market trend appears to have turned around. . “
Sun Pharma was the first loser in the Sensex pack, dipping more than 7%, followed by SBI, Bajaj Finserv, Bajaj Finance, NTPC, ICICI Bank, Kotak Bank, M&M and Maruti.
Meanwhile, market sentiment also weakened following the release of core sector data. Production in eight basic infrastructure sectors contracted for the fifth consecutive month, down 9.6% in July, mainly on lower production of steel, refined products and cement. Investors are now awaiting data on gross domestic production (GDP), which is expected to be released later today.
“The change in the margin system and the reclassification of securities as pledges could undoubtedly lead to disruptions in daily transaction volumes as there is not enough preparation and validation by the participants in this system – namely the exchanges, custodians, participating custodians, clearing house, brokers and clients, ”said Deepak Jasani of HDFC Securities.
“We could see more polarization of stocks in the markets for a while, with the top 200-300 stocks having the most depth and liquidity. Securities currently promised to brokers have to go through the new process, which until This is not going smoothly. As a result, large traders are unsure whether they will have any limits to trade on September 1st which can lead to a drop in volume in the Cash and F&O segments which can last for a few days / weeks “, he added.
Manish Hathiramani, index trader and technical analyst at Deen Dayal Investments, said: “If we break 11,300 at the close, markets could turn negative in the short to medium term scenario. In order to resume the uptrend we need to get past 11,600. The next few sessions are going to be a test of discipline, skill and patience. Traders are cautioned not to enter into a trade without weighing the risks associated with the trade. We could see sudden movements. ” (With contributions from the agency)