Sensex drops nearly 1300 points; Nifty nears 11,250

Key barometers extended losses and hit fresh intraday low in early afternoon trade amid extensive selling pressure. The Nifty 50 slid towards 11,250 level. The illness derived from the novel coronavirus, SARS-COV-2, which originated in China, is starting to affect global trade and travel and dent confidence about earnings and economic growth.

At 12:27 IST, the barometer index, the S&P BSE Sensex, tumbled 1271.32 points or 3.2% at 38,474.34. The Nifty 50 index was down 375.55 points or 3.23% at 11,257.75.

Selling was wide spread. The S&P BSE Mid-Cap index was down 3.29% while the S&P BSE Small-Cap index was down 3.41%.

Sellers outpaced buyers. On the BSE, 265 shares rose and 1743 shares fell. A total of 82 shares were unchanged. In Nifty 50 index, 1 stocks advanced while 49 stocks declined.

Derivatives:

The NSE's India VIX, a gauge of market's expectation of volatility over the near term, soared 27% to 22.5475. The Nifty February 2020 futures were trading at 11,231.65, a discount of 26.60 points compared with the spot at 11,258.25.

On the options front, the Nifty option chain for 26 March 2020 expiry showed maximum call open interest (OI) of 22.95 lakh contracts at the 12,000 strike price. Massive call writing was witnessed at 11,500 strike price, which added 7.84 lakh contracts. Significant call unwinding was seen at 12,500 strike price which shed 1.1 lakh contracts.

Maximum put OI of 22.92 lakh contracts was seen at 11,800 strike price. Massive put writing was observed at 10,800 strike price which added 3.97 lakh contracts. Put unwinding was observed at 12,000 strike price which shed 1.32 lakh contracts.

The F&O contracts for March expire today, 26 March 2020.

Economy:

Investors will keep a close watch on the quarterly GDP estimate for the quarter October-December 2019 (Q3 of 2019-20), which will release today, 28 February 2020. ICRA expects that the Indian economic growth may display a mild improvement. It estimates annual economic growth at 4.7% in the October-December 2019 quarter, marginally higher than 4.5% in the previous quarter.

Buzzing Index:

The Nifty Auto index tumbled 3.36% to 6,937.90. The index has slumped 9.87% in last five trading sessions from its previous closing high of 6937.90 registered on 20 February 2020.

Tata Motors (down 8.76%), Ashok Leyland (down 6.38%), Escorts (down 5.81%), SML Isuzu (down 4.96%), Eicher Motors (down 3.51%), Atul Auto (down 3.89%), Mahindra and Mahindra (down 2.76%), Bajaj Auto (down 2.26%), Hero MotoCorp (down 1.71%) and Maruti Suzuki India (down 1.21%) were top losers in auto segment.

India's automotive supply chain could get disrupted if the manufacturing activities in China continue to remain impacted owing to the coronavirus outbreak. India reportedly sources 27% of its auto components imports from China.

Stocks in Spotlight:

ONGC and HPCL announced acquisition of 9.48 crore shares or 17.28% stake in the government-owned Petronet MHB. Petronet MHB provides petroleum product transportation facility from Mangalore Refinery at Mangalore to the Oil Marketing Company Terminals at Hassan and Devangonthi (Bangalore). The acquisition will open up possible opportunities for synergy, better cost economics and revenue maximization. No governmental or regulatory approvals are required for the acquisition.

Shares of ONGC were currently down 3.70% at Rs 89.85 while shares of HPCL were currently down 3.42% at Rs 197.60.

KIOCL tumbled 8.76% to Rs 94.75. The Expert Appraisal Committee (EAC) accorded an Environmental Clearance (EC) for setting up Non-Recovery Coke Oven plant of 0.18 MTPA (million tonnes per annum) with Cogen Captive Power plant of 10 MW and Ductile Iron Spun pipe of 0.2 MTPA within the existing premises of blast furnace unit at Mangalore, Karnataka. The announcement was made during market hours today, 28 February 2020.

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