D-street Corner: Market fails to close on positive note single day this week, ends with 5.5% cut—What should investors do?

The market failed to close on a positive note on one single occasion this week as it extended the weakness from the last Friday to make it sixth consecutive negative closing on June 17. The domestic equity market ended with around 5.5% cut this week, the biggest weekly decline in more than two years.  

The broader Nifty50 ended lower by 5.6% and the 30-share Sensex settled with 5.4% cut in the week ended June 17 as the market remained under pressure amid rate tightening by global central banks to arrest rising inflation. Among many, US Federal Reserve increased interest rate by 75 basis points, its steepest hike since 1994.   

Another factor fanning the volatility was relentless selling by Foreign Institutional Investors (FIIs) who continued to pull out money from the Indian market.  

The FIIs offloaded shares to the tune of Rs 3,257.65 crore on Thursday and remained net sellers this month by selling to the tune of Rs 34,270.02 crore till June 16. 

As the market continues to trade with extreme volatility and witnessed the biggest weekly decline in the past two years, here is what experts say about current trends of the market.    

Vinod Nair, Head of Research at Geojit Financial Services. 

Rising inflation and policy tightening by global central banks are forcing the market to discount the possibilities of recession. With central banks’ policy tone pointing towards continued rate hikes of higher magnitude, we can expect FIIs to maintain their selling spree. The domestic market will continue to trade with high volatility in the near term, however, the ongoing corrections are opportunities in disguise on a medium to long-term investments. 

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas 

The Nifty, in the week gone by, started with a gap down opening & tumbled down throughout the week. After having broken the key support zone of 15670-15700 on June 16, Nifty witnessed continued selling pressure on June 17. The index attempted an intraday bounce multiple times but couldn’t cross the level of 15400. The overall structure shows that the index can test lower levels in the coming sessions. Thus, the short-term target area continues to be pegged at 15100-15000. On the higher side, the 15400-15500 zone is expected to keep any minor degree bounce in check.   

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities. 

The fight between the bulls and the bears continued in the Bank Nifty index on the last day of the trading week. The index is trading in oversold territory and if holds the support of 32,500 can witness a pull-back rally towards the 33,500 level. The downside support if breached will lead to a fresh round of selling towards 30,000 levels. 

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services 

The dominant theme impacting equity markets globally is the synchronised global monetary tightening and the consequent fears of economic slowdown. The probability of the US slipping into recession is much higher now 

In India, valuations have declined, but are even now above long-term average. So, FPIs will continue to sell, capping a relief rally which can come any time. 

It is impossible to predict the market bottom. Ideal Investment strategy now should be calibrated buying in high quality growth stocks. Mutual fund SIP investors can consider increasing the amount of investment.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision)