Dalal Street Corner: Markets extend losses weighed by weakness in index heavyweights; what should investors do on Thursday?

Domestic markets extended losses for the sixth straight session on Wednesday as benchmarks erased all gains amid volatility and weakness in heavyweights to end in the red. Reliance Industries Limited, HDFC Bank, HDFC Ltd, L&T, Nestle India, TCS and ICICI Bank were among top losers on the Sensex, while ONGC, Hero Moto Corp, NTPC, L&T and JSW Steel dragged Nifty50 the most. 

Benchmark Nifty50 slipped below 17,100 after correcting by 0.17% and barometer Sensex ended 0.12% lower on Wednesday.  

The 12-share Bank Nifty ended with marginal gains as the banking index managed to close near 37,400. The broader markets too pared earlier gains, but nevertheless managed to end the day in the green as the small cap and mid cap indices gained up to around 1 per cent in the closing. 

In the last six sessions since February 16 till Wednesday (February 23), the market capital of BSE-listed companies witnessed capital erosion of Rs 15.49 lakh crore.   

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In related stock market developments, the stock exchanges informed on Wednesday about implementing T+1 settlement cycle in a phased manner, starting with bottom 100 stocks in terms of market value, from February 25, 2022, and Bikaji Foods filed IPO papers with the market regulator SEBI to raise to Rs1,000 crore.  

As bears continue to tighten their grip around the domestic equity market, we have collated views from experts who speak about current market trends and provide insight about how the markets are likely to behave going forward.  

Mohit Nigam, Head - PMS, Hem Securities for Wednesday February 23 

Markets trimmed some of their gains in late afternoon session and closed below the neutral line with the loss of 0.17%. Traders were cautious after Finance Minister Nirmala Sitharaman’s statement that the Russia-Ukraine crisis and the ensuing jump in global crude prices are a challenge to financial stability in India.  

Strong momentum continued in India’s IPO market as Bikaji Foods filed DRHP with the market regulator SEBI to raise 1000 crore. The stock exchanges today informed of implementing T+1 settlement cycle in a phased manner, starting with bottom 100 stocks in terms of market value, from February 25, 2022.  

On technical front, Nifty50 may take immediate support and resistance at 16,850 level and 17,300 level respectively. For Bank Nifty, 36,900 and 37,600 levels will act as immediate support and resistance. 

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

Nifty opened the gap on February 23 and attempted to continue with the recovery process, however, it couldn’t sustain above the key hourly moving averages and dipped into the negative territory at the end of the day. In terms of the price pattern, the Nifty has formed a triangular pattern on the daily chart and is witnessing consolidation within the pattern. The lower end of the pattern is 16800, whereas the upper end is near 17300. The Nifty is expected to witness further consolidation in this range post which can resume the larger uptrend. 

Abhishek Chinchalkar, CMT Charterholder & Head of Education, FYERS  

After starting the day on a strong note, Nifty gave up most of its intraday gains and slipped into red towards the end of the session, weighted by weakness among index heavyweight stocks. With geopolitical tensions remaining elevated between Russia and Ukraine, volatility looks here to stay as things stand.  

For the past couple of months, Nifty has been taking immense support near the 16780-16800 region, which currently also coincides with the 200-day MA. Given this, 16800 will be a critical support to keep an eye on in the short-term. A break underneath would expose the index for a further 2-3% correction.  

On the higher side, Nifty has been forming a sequence of lower highs for the past one month. A break above 17300 would mark an end to this lower high sequence and ease near-term selling pressure in the index. 

Vinod Nair, Head of Research at Geojit Financial Services.  

As global markets turned positive, domestic indices opened the day on a positive note, however, witnessed high volatility and succumbed to selling pressure to close the day in favour of bears. The impact of geopolitical uncertainties and soaring fuel costs will continue to keep markets across the globe highly volatile. Broader markets outperformed benchmark indices while on the sectoral front, realty stocks attracted buyers. 

(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.)