North Korea threat drags Sensex 448 pts, Nifty below 10,000; Midcap falls 3%

Bears took complete control over bulls on Friday as the Nifty closed below its key psychological 10,000-mark and the broader markets declined 3 percent, tracking global weakness after North Korea threat indicated another hydrogen bomb test and S&P downgraded China’s credit rating.

It was across the board sell-off led by metals, realty, banking & financials and infra stocks but the Nifty IT outperformed with marginal loss of 0.2 percent.

Benchmark indices posted their biggest single day fall in 2007. The 30-share BSE Sensex plunged 447.60 points or 1.38 percent to 31,922.44 and the 50-share NSE Nifty lost 157.50 points or 1.56 percent to 9,964.40.

Experts expect the Nifty to consolidate with a negative bias in coming expiry week but they don’t see major correction. Every fall should be bought as the fund flow is expected to continue to support the market, they feel.

“Broadly we are positive on equity market and we see buy on dips as an appropriate strategy,” Murli Maiya of JPMorgan said in an interview to CNBC-TV18.

He feels economic growth and no interest rate hike present benign environment for equity and debt markets.

He sees equity markets performing well with no disruptions in near future, though periodic geopolitical issues make the investors step back temporarily, he said.

The next Nifty support will be at 9,850, followed by 9,700 but as far as the index holds 9,950, it won’t break those supports, Ashwani Gujral of ashwanigujral.com said.

The broader markets fell more than benchmarks today as the BSE Midcap and Smallcap indices cracked nearly 3 percent each on weak breadth. About four shares declined for every share rising on the BSE.

On the global front, Asian markets ended lower amid geopolitical tensions but European markets recovered to trade mildly higher ahead of key speech from the UK’s Prime Minister Theresa May.

Meanwhile, the rupee recovered sharply after hitting lowest level in six months. It ended flat at 64.80 against the US dollar after hitting an intraday low of 65.16. The RBI’s intervention and selling dollars by exporters & banks helped the rupee recover in afternoon.

Metals shares fell the most among sectoral indices, following correction in global metals prices amid North Korea tensions, China’s credit downgrade and Fed rate hike expectations.

The Nifty Metal index fell 4 percent. Hindalco Industries, Tata Steel and Vedanta shed 4.5-5.6 percent. These were biggest losers among Nifty50 stocks.

Reliance Industries, L&T, ICICI Bank, Yes Bank, SBI, Infosys and Axis Bank declined 1-3.5 percent but HCL Technologies, Bharti Infratel and Wipro were only gainers among Nifty stocks, up 0.6-1.6 percent.

In broader space, Reliance Capital, Indiabulls Real Estate, Graphite India, HEG, Jindal Steel, Wockhardt, Ipca Labs, Alembic Pharma, Torrent Pharma, SPARC, Walchandnagar, Tinplate, Jai Corp, Peninsula Land and Future Enterprises cracked 7-10 percent. Recently listed Matrimony.com also plunged 8.6 percent.

However, Orchid Pharma extended gains despite sharp fall in market, rising 11.4 percent today, on top of 20 percent rally in previous session on USFDA approval for Tamil Nadu API plant. Nelco also gained 5 percent.

Reliance Home Finance, the subsidiary of Reliance Capital, closed at 5 percent upper circuit at Rs 107.20 on Day 1.