Mumbai: Indian stock market witnessed a freefall on Tuesday with both the BSE Sensex and the Nifty50 closing below the psychological levels of 31,000 and 9,000, respectively.
The Sensex lost over 1,000 points by the end of the day's trade. Weakness in the domestic indices was in line with the bear run across the global markets, after crude oil prices in the US in an unprecedented development fell below zero and turned negative.
Rahul Sharma, Research Head at Equity99 said: "It was a very nervous day for most traders today as benchmark indices broke key support levels today on concerns of a historic fall in international crude last night where US crude prices nosedived below the $0 a barrel mark for the first time ever on fears of a supply glut."
He said that dealers and analyst now fear that the much talked about the global recession is very close which will have serious impact on the global equity markets too in the coming days.
According to Sharma, market will continue to trade in the negative zone in the next few days and the upcoming earnings reports and economic data will also keep investors cautious.
Deepak Jasani, Head of Retail Research at HDFC Securities noted that on the BSE, the top sectoral gainers were the BSE Telecom and Healthcare indices, while the major losers were the BSE Banking index, Metal, Auto and Oil and Gas indices.
Major Asian markets have closed on a negative note. European indices like the FTSE, DAX and CAC have ended lower, he said.
On the technical front, traders will need to watch if the Nifty can bounce back from the immediate supports of 8,821, Jasani said, adding that, otherwise the intermediate downtrend may continue that could take the Nifty towards the next downside targets of 8,360 - 8,055.
On Tuesday, the Nifty50 on the National Stock Exchange closed at 8,981.45, lower by 280.40 points or 3.03 per cent from its previous close.
The Sensex closed at 30,636.71, lower by 1,011.29 points or 3.20 per cent from the previous close of 31,648. It had opened at 30,836.19 and recorded an intra-day high of 30,900.12 and a low of 30,378.26 points.
The historic plunge in the WTI crude oil prices in the US was the major factor for the rout in global equity markets.
Due to high supplies and lower offtake amid the coronavirus crisis and the worldwide standstill, the US has run out of storage for the commodity posing a major challenge for the market.
Currently, the May contract of WTI crude on the NYMEX is at -$4.47 per barrel.
Nitin Shahi, Executive Director, Findoc Financial Services Group said that the timeline of the impact on crude prices is directly related to the length of the lockdown.
"Storage capacities worldwide for crude are nearly full. If the lockdown continues for longer period of time, there is a higher possibility that output cutbacks will take place and the smaller oil producers would have to shut off their oil tap first," Shahi said.