Dalal Street Corner: Markets witness biggest fall after 7 sessions; what should investors do on Wednesday?

The Indian markets on Tuesday failed to hold intraday recovery, and closed at the day’s low level, with the Sensex slipping over 550 points and the Nifty50 above the 18,100-mark. The decline major came from auto stocks, as the index reversed Monday’s gain, in this regard, Nifty Auto falls more than 2 per cent. 

On the contrary, private banks lend support to the frontline indices from further weakness, as all major banking heavyweights close in the green at the close. Nifty Bank closed flat with a negative bias, down merely 0.2 per cent, as private lenders aided the 12-share banking index from further fall. 

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Meanwhile, broader markets underperformed than the benchmarks, as both Nifty Mid and Small-cap fell over 2 per cent at the close. The market breadth firmly favour declines, the advance-decline ratio stands at 2:7 on Tuesday. 

As many 43 Nifty50 stocks close in the red, as Tata Consumers, UltraTech and Maruti Suzuki became top losers. Tech Mahindra slips over 3 per cent after the company announced new acquisitions. 

Similarly, cement stocks take a major beating post mixed UltraTech earnings, in this, Grasim, UltraTech, ACC, Ambuja, Ramco Cements each slipped between 3-7 per cent at the market close. 

Ahead of third-quarter earnings for FY22, Bajaj Finance closed negative over 1 per cent at the market close. only select midcap stocks such as PTC, Chola Finance, ICICI Lombard closed higher. 

Vinod Nair, Head of Research at Geojit Financial Services, said, “Following a weak lead from the global markets, domestic indices witnessed a highly volatile trade ahead of the press conference by the Finance Minister today.” 

He added, “Surge in oil prices and FIIs turning net sellers also added volatility in the domestic market. Globally, markets witnessed selling pressure following a surge in US treasury yield amid rate hike worries while oil prices rose on supply tension owing to the drone attack on UAE.” 

Nifty formed a Bearish Engulfing pattern on a daily scale and wiped out, all the gains of the last 4 trading sessions, Chandan Taparia Vice President | Analyst-Derivatives Motilal Oswal Financial Services said. 

“It has broken a rising support trend line on a daily scale and closed the day with losses of around 200 points. Now, it has to hold above 18081 for an up move towards 18250 and 18350 zones while on the downside support exists at 18000 and 17900 marks,” Taparia said in a post-market comment. 

According to Rahul Sharma - co-owner, Equity 99, the correction might continue for some time now with minor profit booking seen with Budget nearing. 

In terms of technical levels, Sharma said, “Nifty50 – Post today`s correction 18090 will act as strong support for Index, If this level is breached then we might see 18000 levels. On the upper side 18175 will act as major resistance, if this level is breached, we may see a rally to 18235 and 18300 levels too.” 

For Bank Nifty, the level 38180 will act as very strong support, if this level is broken then we might see 37950, post which 37690 level is possible, he also said, adding further that on upper side 38325 will act as very strong resistance and once it is broken, we may see 38450 38580 levels too. 

"18350 proved to be a stiff resistance and the markets decided to give up some of its gains! Closing below 18000-18100 might spook traders and motivate them to offload positions. Until that does not happen, the market trend is positive and long positions can be accumulated on corrections,” Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said.