Dalal Street Corner: Nifty, Sensex end with nearly 4% cuts as market closes in red on all 5 days this week; what should investors do on Monday?

In one of the worst weekly closings this year, the benchmark indices closed lower by nearly four per cent this week. The broader Nifty 50 declined 3.8% and the Sensex dropped 3.7% in the week ended May 13, 2022. The indices closed in the red on all five trading sessions this week as they extended their losing streak to the sixth day on Friday. In the week closing on May 13, metal was the worst hit sector as Nifty Metal and BSE Metal closed with over 12% and more than 13% cuts respectively in the last five days.  

Meanwhile, on Friday, despite opening on strong note, Nifty50 slipped further to below 15,800 as the 50-share blue chip index ended marginally lower by 0.16%. Similarly, the 20-share Sensex dropped by more than 130 points to settle near 52, 800.  

Nifty Auto, which gained more than 2.5% in a weak market, was the top performing index on Friday. Tata Motors led the Nifty50 pack as the domestic auto major stock surged more than 8%, while Sun Pharma gained nearly 4% to led the 30-share Sensex.  

Meanwhile, of the 9 trading sessions that the market witnessed this month, benchmarks closed in the red mark on 8 occasions, with the exception of May 5 when the market gained marginally to end flat with positive bias.  

Speaking of the volatility and gain Friday's afternoon session, Narendra Solanki, head of equity research at Anand Rathi Investment Services, said with many days of sell-off in the domestic and global markets, and two key inflation data from India and the US already discounted, we are seeing some kind of a relief rally. 

Vinod Nair, Head of Research at Geojit Financial Services, said high domestic inflation data failed to spook investors since the recent selloff has already absorbed the ongoing uncertainties in the market.  

Domestic markets witnessed a rebound as buyers took the recent correction into their advantage following the trend of the global market, he said.  

"However, the weakness seen in the banking sector triggered a late selloff. The US Fed cautioned against an aggressive policy stance in order to bring inflation under the Fed’s comfort zone of 2%," the expert added.  

This is the season of headwinds for markets, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

"High inflation in the US and the hawkish Fed has pushed up bond yields, negatively impacting equity markets. Global economic uncertainty and market turbulence have triggered safe haven dollar buying. FPIs continue their selling spree . To top it all, CPI inflation for April has come at a disturbingly high level of 7.79 leaving no option for RBI, but to turn hawkish in the coming policy meets," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.   

He, however, underlined that the positive side is that all this bad news is already known and factored-in by the market.  

Since the market is oversold, a bounce back can be expected but the texture of the market remains weak, said the expert. 

"For long-term investors, high quality financials and IT provide investment opportunities," Vijaykumar recommended.