Dalal Street Corner: 2-day sell-off leaves investors poorer by over 8.5 lakh cr; what should investors do on Tuesday?

The Indian market continues to face selling pressure amid multiple factors, including fears of inflation and subsequent rate hikes by central banks worldwide to arrest it. Extending the losing streak, the benchmarks Nifty50 and Sensex declined 0.67% each on Monday. Midcap and small cap stocks, along with selling off in banking, metal, energy and consumer durable stocks led the downfall on Monday. Nifty IT though managed to end in the green as HCL Tech, Infosys and TCS were among the top gainers on the benchmarks.  

Meanwhile, the profit booking in the market left investors poorer by more than 8.5 lakh crore in the last two sessions. Against a market cap of Rs 2,59,64,889.37 on May 5, the m-cap cap BSE-listed companies came down to Rs 2,51,97,086.42 on May 9, a decline of 8.56 lakh crore. Market capitalization of BSE companies stood at Rs 2,55,17,716.80 on Friday, May 6, 2022.  

Small cap and midcap stocks continued to face massive sell-off as Nifty mid cap and small cap indices fell over 1.5% and 2% respectively as India VIX shot up to end near 22-mark. 

Amid uncertainty in the market, here is what market experts say about the current trend and recommend what investors should do.  

Vinod Nair, Head of Research at Geojit Financial Services

The market continued its downward rally amid lingering concerns over the weakening rupee, global interest rate hikes and tightening lockdowns in China.  

The relentless rise in the US dollar index owing to interest rate hikes and rising US treasury yield hammered investor's risk appetite. Strong US jobs data indicated possibilities of faster rate hikes forcing investors to opt for safe-haven assets. 

Ajit Mishra, VP - Research, Religare Broking Ltd 

Markets started the week on a feeble note and lost over half a percent, in continuation of the prevailing corrective phase. Weak global cues triggered a gap down start, followed by volatile swings till the end.  

We’re not seeing any respite in the global markets, especially the US, and are largely reflecting the same trend at our end too. Besides, mixed Q4 earnings are further adding to the negativity. We reiterate our view to focus on shortening opportunities on the rise until we see some sign of reversal. On the index front, support is intact at 16,000 in Nifty and the 16,550-16,650 zone would act as immediate hurdle. 

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

The Bank Nifty index yesterday filled the previous gap of 34000 and needs to sustain above this level for a relief rally. The immediate resistance on the upside stands at the 34600-34800 zone and a break above this will lead to short covering towards the levels of 35500. The index, however, if it breaks the level of 34000, will witness further downside towards the level of 32500. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

Hawkish stance by the Fed, rate hikes by RBI, Bank of England and Australian central bank have created an atmosphere of risk-off for equities.  

We don't know how long this will last. Nifty corrected by 3.9 percent last week, but investors should not commit the mistake of aggressively buying on this dip assuming that prices have corrected a lot.  

Even after the correction Nifty is trading at around 19 times FY23 earnings. This is higher than the long-term average of 16 times and certainly not buyable valuation, particularly when equity markets globally are facing many headwinds like risk of growth slowdown, Ukraine war and supply chain disruptions caused by stringent lockdown in China.  

However, long-term investors may start nibbling at high quality stocks in segments like financials where there is valuation comfort". 

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