Dalal Street Corner: Investors lose over Rs 8 lakh crore in market selloff; what should investors do on Tuesday?

The stock markets witnessed one of the worst closings in the last few months as the Sensex slipped 1170 points and the Nifty shed 324 points to settle at 17,417. Both headline indices corrected 1.96% each as bears took the control of the stock markets.  Reliance Industries, Paytm, Bajaj Finance, Bajaj Finserv, Tata Motors, and NTPC contributed the most in this market fall amid multiple factors.  

Broader markets also followed benchmark indices as both the midcap and small-cap indices slumped more than 2% each. The Bank Nifty slumped over 800 points to settle at 37,129. Besides, all major indices Nifty Realty, Media, PSU Bank, and Auto were in the red and fell up to 4%.

The slump was largely triggered by the shelving of Reliance's deal with Aramco, repeal of farm laws, Paytm poor show, and weak global cues.  

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The investors lost over Rs 8 lakh crore in the market sell-off on Monday as market capitalisation on the BSE stood at 260.98 lakh crore on November 22 as against Rs 269.20 lakh crore on November 18, showed the BSE data.  

Reliance Industries, which declined more than 4% during the day after it shelved a proposed deal to sell a 20 percent stake in its oil refinery and petrochemical business to Saudi Aramco, and continued selling pressure on shares of India's largest IPO Paytm are bearing heavily on indices, said Arijit Malakar, Head Research (Retail) of Ashika Stock Broking Ltd.  

"The Indian markets declined sharply today due to weak global cues amid concerns about the European Covid-19 curbs and the possibility of earlier interest-rate increases in the United States. With a large part of the festive and earnings season behind us, there are lesser triggers for an upside versus a variety of looming factors to downside risks," he said.  
Reports on the deterioration of the public health situation increased the probability of liquidity rollback, and emerging inflationary trends are dampening investor sentiments, observed Malakar.  

Repeal of the agricultural laws was another factor that triggered this fall. "Finally the Bears got their act together as a series of events over the weekend gave them the upper hand with almost all the sectoral indices barring the Metal Index plunging today. The repeal of the agriculture laws had an impact on the PSU stocks, while the O2C deal not going through left a 4.5% cut on Reliance. Even as IPO Investors come to terms with the reality, the inflationary impact on demand across several sectors continues to worry the street, " said S Ranganathan, Head of Research at LKP securities. 

The market witnessed the continuation of correction market and an attempt to hold the level around the Nifty 50 Index level of 17450, said Vijay Dhanotiya, Lead of Technical Research at CapitalVia Global Research Limited. "The research suggests that sustaining above 17450 will be an important level for the market to stay positive in the short term. If the market is unable to sustain the level of 17450, it can witness the continuation of correction in the market till the levels of 17350-17250. Technical indicators suggest a volatile movement in the market," he added.

Technically, the nifty index has confirmed Head & Shoulder Pattern breakdown on the daily chart and moved down from the neckline, says Sachin Gupta, AVP, Research, Choice Broking.

"The index has also sustained below Lower Bollinger Band formation, which indicates a bearish trend for the coming days. Furthermore, Stochastic & MACD has also witnessed a negative crossover on the daily timeframe, which suggests a bearish move in the index. The Nifty has immediate support at 17,200 levels while resistance at 17,650 levels. On the other hand, Bank Nifty has support at 36,300 levels and resistance at 38,500 levels," said Sachin.   

With the recent correction, markets have entered into a consolidation phase, where stock-specific volatility can be utilized to form the equity portfolios, said Amit Gupta, Fund Manager – PMS, ICICI Securities. "With the recent correction, markets have entered into consolidation phase where stock-specific volatility can be utilized to form the equity portfolios," he added.

(Disclaimer: The views/suggestions/advices 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.)