RIL, Voda Idea, Escorts: These 38 stocks breached 200-DMA amid market crash

If the indices fail to reverse the downward trend, these stocks may further plunge up to 10 per cent

Domestic equity markets have turned extremely volatile over the past few days as investors grapple with record Covid-19 infections in the country and fars of subsequent derailemnt of a fragile economic recovery.

So far in the month of April, the benchmark S&P BSE Sensex and the Nifty50 indices have cracked 3.2 per cent and 2.5 per cent, respectively as India's new Covid cases soared from 72,115 as on March 31 to 160,838 as on April 12. On Monday, the Sensex fell 1,708 points, or 3.4 per cent, to end the session at 47,883 -- the lowest close since January 29 -- while the Nifty 50 index closed at 14,311, declining 524 points, or 3.5 per cent. The fall was the biggest since February 26 and the second biggest in the past one year. It wiped out Rs 8.8 trillion of India’s market capitalisation.

As per charts, the recent weakness in the BSE Sensex and Nifty50 has pushed many stocks below their 200-DMA aggressively. Technically, 200-DMA is a crucial moving average indicator that uses average price over the past 200 days to identify momentum and strength in stocks. Investors consider 200-DMA as a key metric to identify bullish and bearish sentiment. Stocks that trade above 200-DMA are believed to have a strong bullish outlook, whereas stocks that breach 200-DMA are said to have lost the strength and are expected to weaken going-ahead.

Currently, indices are exhibiting resilience and are trying to conquer major resistances. After a short-term weakness recently, the Nifty and BSE Sensex managed to show a rebound even though they failed to cross the significant resistance of 15,000 and 50,500 levels. This lead to a reversal on the downside, resulting in a negative sentiment and weakness that may gain momentum gradually.

Against this backdrop, about 101 stocks from the Nifty 500 index are now below their 200-DMA. Of these, nearly 38 stocks were added to the list after the recent market correction. The list includes Amara Raja Batteries, Bata India, PVR, Escorts, Indiabulls Housing Finance, Reliance Industries, GMM Pfaudler, CRISIL, Hero MotoCorp, Zee Entertainment Enterprises etc.

Similarly, breakdown in the Nifty Bank index pushed major midcap banks like Bandhan Bank, IDBI Bank, RBL Bank, and DCB Bank below the 200-DMA levels.

Going forward, if the indices fail to show retrieval at the current momentum then the weakness may see aggressive bearish sentiment. If that happens, the correction in these 38 stocks may see a decline of nearly 10 per cent as per the 200-DMA.

Source:spidersoftwareindia