Fear to rule on D-Street

The sharp sell-off seen on Wall Street overnight is definitely making way for fear on D-Street. This is quite evident from the severe decline seen in SGX Nifty as it has tumbled 118 points and trading at the 11,425 mark.

It would be interesting to see whether the 21-day EMA, which has acted a line of support for the bulls, could once again prove to be a line of recusing, especially when the global markets are under turmoil. The ray of support for the bulls would be the 21-day EMA, which is currently placed around 11,377 levels and a close below this would mean that Nifty has formed a short-term top around the recent swing high.

In the early action in Asian markets, the investors are seen pressing the sell button on the back of US stocks, posting their biggest collapse since early June in the overnight trade. Hong Kong’s Hang Seng has witnessed losses of 1.35 per cent, followed by China’s Shanghai Composite and Japan’s Nikkei 225, which has dropped 1.19 per cent and 0.96 per cent, respectively.

Indian markets ended Thursday’s session with modest losses. Markets began the day with positive bias; however, as the day progressed, the bull’s power started to wane as India’s PMI data fell for the sixth straight month in August. In the end, Sensex and Nifty lost 0.24 per cent and 0.07 per cent, respectively. The broader markets outperformed the benchmark indices with Nifty Mid-cap and Small-cap surging 0.85 per cent and 0.69 per cent, respectively. On the sectoral front, the mixed performance was seen wherein Nifty IT and Nifty Pharma emerged as the top gainer. On the other hand, Nifty Bank and Nifty Private Bank were the top losers. India VIX continued its downward trajectory and slipped 2.72 per cent.

On Thursday, Wall Street was a sea of red as stocks posted one of the sharpest falls since early June and the big tech stocks lead the fall. The tech-heavy Nasdaq tumbled a whopping 5 per cent and ended below the 11,500 mark, followed by S&P 500 and Dow, which declined 3.5 per cent and 2.8 per cent, respectively. Equity market across Europe fell like ninepins in the last hour of the trade as the double whammy of a weak euro area economic data and warning from the Bank of England, that the risk to the UK economy from the pandemic crisis was greater than the bank had projected in August, weighed on markets.