Dalal Street Corner: Markets slip for 3rd day in row as FIIs selling pressure continues - What should investors do on Tuesday?

The Indian markets slipped for third straight day with major selling seen in heavyweights. The BSE Sensex closed over 1000 points lower and Nifty50 settled below 17250-mark, while Nifty Mid-cap declined over 1 per cent outperforming the benchmarks at the market close on Monday. 

Index heavyweights such as HDFC Bank and HDFC were the biggest drags for Nifty index, followed by ICICI Bank, Infosys, Kotak Bank and L&T, which also contributed to the fall. The market breadth favours declines, advance-decline ratio stood at 1:2 on Monday. 

Public sector undertaking companies' shares gained most in a weak trading session, Power Grid, ONGC, NTPC were among the top gainers on Monday. 

Rakesh Jhunjhunwala-backed Lupin continued the downward move following a weak Q3, stock down 8 per cent at close on Monday. Similarly, Firstsource extended Friday’s losses as company cuts revenue growth guidance. While GNFC, IndiGo amongst top midcap gainers after reporting strong earnings. 

A day after drubbing on Friday, Godrej Properties shares recovered some losses and closed 4 per cent higher after company cancels DB Realty deal. 

India VIX rose by 8.13% from 18.89 to 20.43 levels. Volatility spiked above 20 zones and spurt in VIX due to volatile domestic and global cues are suggesting wild swing in the market for coming sessions. 

“Domestic markets are volatile ahead of the state elections, witnessing a steep fall led by FII selling and weak global cues,” Vinod Nair, Head of Research at Geojit Financial Services. “The volatility in the market is likely to continue due to high chances of interest rate lift-off by the RBI given domestic inflation and policy tightening by global central banks.” 

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

Expert: Naveen Kulkarni, Chief Investment Officer, Axis Securities 

We expect that the markets will continue to remain volatile on the back of the recent interest rate movements globally. Most emerging markets will continue to witness FPI (Foreign Portfolio Investors) outflows and currency depreciation in the short term.  

We believe that this volatility should be bought into through regular investments, as earning expectations for Indian corporates remain strong. Some sectors which can perform well in the short-term are banks, commodities and energy. 

Expert: Manoj Dalmia, Founder & Director, Proficient Equities Limited 

The selling is by FII due to the upcoming MPC meeting by RBI, inflation, rising bond yields and crude prices. The US Fed turning hawkish could fire selling in different markets around the world. 

Investors can consider such selling as an opportunity to buy fundamentally strong stocks. Some sectors like PSU banks, metals are seeing good buying where they report good earnings. 

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

Nifty index opened negative and cascaded down throughout the day and drifted towards 17100 zones. It witnessed a steep decline and closed with losses of around 300 points. It formed a Bearish candle on daily scale and has been forming lower highs - lower lows from the last three sessions.  

Now till it holds below 17350 zones, bounce could be sold, and weakness may be seen towards 17000 and 16850 zones whereas hurdles can be seen at 17500 and 17777 zones. 

Expert: Rupak De, Senior Technical Analyst at LKP Securities.  

Nifty remained firmly in the bears' grip as the benchmark fell below the support of 17400. On the lower end, the index fell towards 17100 before closing just above 17200, which is two-thirds of the previous rally. Going ahead, Nifty may find resistance at 17400; if it remains below 17400, we may see weakness in the market. On the lower end a closing basis support is pegged at 17000.