Indian equities witnessed a sharp intraday selloff on Monday, May 20, with benchmark indices Sensex and Nifty plunging nearly 1 per cent each. The BSE Sensex cracked an 800-point resistance to an intraday low of 81,209.64, while the Nifty 50 lost 260 points to 24,679.90 amidst otherwise severe profit-booking off sectors.
The broader indices followed suit in line with sentiments, with both Nifty Midcap 100 and Nifty Smallcap 100 indices shedding around 1 per cent after a six-day rally. The global cues bore a negative tint, prompting investors to crystallize gains on recent outperformers.
Top gainers and losers
In today’s sessions, the auto pack was the biggest laggard, losing over 2 per cent. Stocks like Hero MotoCorp, Bajaj Auto, Eicher Motors, Maruti Suzuki, and M&M fell 2-3 per cent each. The correction happened after a sharp run up in the past weeks and was basically a profit-booking exercise by traders.
Banking stocks also made for a big drag as Nifty Bank slipped almost 1 per cent to 54,880.15. Pressure was visible on important financial names such as Shriram Finance and Edelweiss Financial, both of which registered some hefty losses.
Pharma and media counters joined in the decrease, dragging the sentiment from all directions. All the sectoral indices ended in red, a telltale sign of a heavy selloff.
Mixed global signals dent sentiment further
Adding to the domestic weakness were cautious global cues. Chinese markets were upbeat about the surprise rate cut, while the uncertainty about the long-awaited US-India trade deal spooked the investors. They had been very optimistic, but without anything in black and white, traders opted to go risk-averse.Â
Meanwhile, newly forged trade breakthroughs between Washington and the UK and China have added another layer to the uncertainty as to India’s positioning on the global front.
Market outlook cautious despite recent highs
Today’s decline is believed to be healthy pullback after weeks of strong gains, particularly mid and small shares. With geopolitical cues and central bank moves still playing out, along with earnings commentary, it is believed we can expect more volatility to remain ahead of us.
Investors should remain cautious and focus on quality stocks with quality fundamentals during the ongoing churn.
