Indian equity benchmark indices — Sensex and Nifty50 crashed during intra-day trading on Monday, January 24 amid weak global cues. The BSE Sensex fell over 1,547 points to 57,489.19 while Nifty50 dropped 480 points to 17,136.90 while writing this article. On 30-share Sensex pack, around 28 stocks were in the red zone, led by Reliance Industries, Infosys, HDFC twins, Bajaj Finance, Asian Paints, Kotak Bank, Tech Mahindra, ICICI Bank, Titan, L&T, Tata Steel. The BSE MidCap and SmallCap indices were plunged by 3 per cent and 4 per cent, respectively.
The bloodbath in the domestic market was fuelled by rise in US treasury yields ahead of the scheduled meeting of US central bank. The sooner-than-expected policy rate hike to tighten the inflation in the US, spooked markets across the world. High US yields and a interest rate hike forced the foreign investors to pull out money from an emerging market like India, leading to crash in the domestic market amid selling pressure. Analysts pointed out increasing crude oil prices and subsequent inflation also created pressure on the financial market across the globe. Moreover, upcoming assembly elections in five states have also dragged the market down for the last five session, believed experts.
“This weakness in the markets is due to the FPIs and FIIs fishing out money from the Indian markets. Ahead of Christmas, FIIs had gone on long winter vacation due to week long Christmas festival followed by New Year. At that time they were in net sellers’ position when the NSE Nifty was at 16,400 levels. When they came back from vacation, Nifty was above 18,000 and they once again fishing out money from the Indian markets,” said Ravi Singhal, vice chairman at GCL Securities.
What Investors Should do Now
Over past 22 months we have observed that, post 10-12 per cent correction the subsequent major rallying segment have seen intermediate retracement to the tune of 38.2 per cent-50 per cent of respective rally while sustaining above 100 days EMA. Hence in current scenario, we expect index to maintain the same rhythm and buying demand to emerge around 17,400 as it is confluence of 50 per cent retracement of past one-month rally (16,410-18,350) coincided with 100 days EMA. Therefore, focus should be on accumulating quality stocks to ride next leg of up move,” said ICICI Direct in a report.
For investors, Dr Ravi Singh vice president and head of research ShareIndia, “With omicron Covid-19 cases possibly peaking which is a positive sign for the recovery of the economy. However, the selling pressure may continue till Thursday this week and if Nifty closes below 17,200 then it may further go down till 16,800 levels. Investors may take fresh entry in the market at lower levels.”
“Going ahead, we do not expect Nifty to breach the key support threshold of 17,400 levels followed by meaningful bounce towards psychological mark of 18,000 levels. In the process, stock specific action would prevail ahead of key global event of Fed meet coincided with monthly derivative expiry and ongoing earnings season,” ICICI Direct suggested.
“In large caps we like Reliance, SBI, Bajaj Finance, Tata Motors, Hindalco, Larsen & Toubro, United Spirits, DLF while in Midcaps we prefer Trent, Apollo Hospital, KNR Construction, Tata Power, Brigade Enterprise, Canara Bank, Suprajit Engineering, Bharat Electronics, Indian Hotels,” ICICI Direct mentioned in their daily report.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
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