Dalal Street Corner: BSE-listed companies erode m-cap of Rs 4 lakh cr – what should investors do on Monday?

The Indian market erased most gains made in the last three days, frontline indices declined over 1.3 per cent on Friday, as weak global cues lead to an all-round fall in the market, with 45 of 50 Nifty stocks fell. Sectorally, all indices ended in the red with IT plunging most by nearly 3 per cent at the market close.  

The BSE-listed companies erode the market cap of over Rs 4 lakh crore on Friday. The market breadth favours declines, advance-decline ratio at 2:7, while volatility index rises over 5 per cent. 

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Mere 5 stocks closed in the green, with Indian Oil Corporation gaining most by over 1.5 per cent in otherwise negative market, followed by IndusInd Bank, NTPC, Tata Steel and BPCL gained marginally. On the contrary, Grasim and Tech Mahindra were the top losers down over 3 per cent at close.  

TVS Motor closes off intra-day lows after a large trade of over 2 per cent equity; Aurobindo, Laurus, Petronet, IGL gain in a weak trading session on the last day of the week. 

In the markets this week, Sensex, Nifty and Nifty Bank slip nearly 1% each, while Midcap Index erased gains of last week. Realty, FMCG & IT are top losing and Metal & PSU top gaining this week. 

Selling intensified after former Reserve Bank of India Governor D Subbarao stated that low-interest rates and the vast amount of liquidity available in the economy today could jeopardize financial stability, Gaurav Garg, Head of Research, Capitalvia Global Research Ltd said in a noted 

Subbarao went on to say that the issue for central banks, including the Reserve Bank of India, was to strike a balance between maintaining price stability, supporting growth and employment, and maintaining financial stability in a globalized world, Garg further said in his comment. 

We have collated views from different experts as to what investors should do when trading resumes:-

Expert: Vijay Dhanotiya, Category Lead- HNI Products at CapitalVia Global Research Limited. 

The market witnessed volatile movements after the initial gap down in the market and an attempt to hold the support level around the Nifty 50 Index level of 17400. While sustaining above 17400 is the key factor from a short-term perspective, If the market is unable to sustain the level of 17400, the market might see the correction till the level of 17100.  

Expert: Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services 

Nifty index opened gap down and drifted down to 17300 zones. It moved in a consolidative manner thereafter followed by a bounce back of 100 points from lower zones and finally closed with losses of around 230 points.  

It formed a Bearish of candle on daily scale with long lower shadow and a small bodied Bearish candle on weekly scale which indicates tug of war between bulls and bears in broader trading range. Now it has to hold above 17350 zones for a move up towards 17500 then 17777 zones where on the downside support exists at 17250 and 17100 zones. 

Expert: Vinod Nair, Head of Research at Geojit Financial Services.  

Aggressive FII selling resulting from negative global cues wreaked havoc in the domestic market today. Globally markets traded in red amid mounting concerns of surging US inflation which fuelled fears of a hawkish rate hike by the central bank. US inflation surged 7.5% on an annual basis with the consumer price index for all items rising 0.6% in January.  

Expert: Rupak De, Senior Technical Analyst at LKP Securities 

Nifty found resistance around 17635 and slipped lower towards the gap on the daily timeframe. On the daily timeframe, a red-bodied candle is visible. Once again, the index has slipped below the 50 EMA. The trend looks sideways to negative for the near term. On the lower end, support is visible at 17250-17265. However, Nifty needs to move beyond 17640 to change the current bearish trend.