S&P Sensex fell by over 800 points while the Nifty50 broke below its crucial support placed at 200-days SMA and closed at 10,559.

Selling was witnessed across all categories with OMCs taking a beating after the FM declared a cut in fuel prices by Rs 2.5 and the burden to be borne by OMC.

Earnings of OMCs will be negatively impacted as they will have to absorb Re 1/ litre on the auto fuel price (petrol and diesel), which will result into the sharp drop in the auto fuel marketing margin, suggest experts.

The rupee jumped to a new all-time low of 73.81 against the US dollar. In the last 15 minutes of the trade, rupee recouped 23 from the low, to settle at 73.57. On a year-to-date (YTD) basis, the rupee has witnessed a fall of almost 16% against the dollar.

The decline in the rupee led to a sharp increase in government bond yields, due to increasing expectations that the RBI’s monetary policy committee (MPC) could go for a bigger rate increase than expected on Friday. Economists expect that on Friday, the RBI could well-increased rates by 25 bps.

On the way down, the index bounced back from its swing low of 10,557. From the short-term view, 10400 shall now be the next level to watch out for. On the flip side, the gap area of 10850 shall now take the role of a key hurdle zone.

India VIX moved up by 4.39% at 18.91 levels. Volatility still holds the position which is not giving the relax mode to bulls and suggests a tight bear grip in the market.

Technical View:

Nifty formed a Bearish Belt Hold kind of pattern on daily charts. The index may continue to lose towards 10500 then 10350 levels while on the upside sudden hurdle is seen at 10750 levels.

Three levels: 10400, 10779, 10850

Max Call OI: 11000, 11200

Max Put OI: 10500, 10700

Technical Recommendations by Analysts:

Hindalco Industries Ltd: Buy| Target: Rs 285| Stop Loss: Rs 236| Returns 13.5%

Piramal Enterprises Ltd: Buy| Target: Rs 2510| Stop Loss: Rs 2191| Returns 9%

Adani Ports: Sell Oct Futs| Target: Rs 298| Stop Loss: Rs 330| Returns 6.5%

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