Indian markets fell sharply today, breaking their recent record streak. The Sensex finished more than 1,400 points lower at 45,553 after sliding more than 2,000 points to the day’s low. The Nifty finished 3.2% lower at 13,328 and the broader markets also saw a large sell-off. The BSE mid-cap and small-cap indices fell more than 4% each. Although many analysts expected a consolidation after the recent bullish move, the intensity of today’s collapse took everyone by surprise.
“The new variant of the coronavirus in the UK spooked the markets as we witnessed heavy selling in fundamental trading during the afternoon. As the street readied for a correction this week after a strong bull move, the big The speed of the decline in the broader markets took the bulls by surprise as virtually none of the key components of the indices were green today, “said S Ranganathan, research director at LKP Securities.
All Sensex 30 components ended in red. ITC, NTPC, SBI, M&M, IndusInd Bank plunged 5-7%, while ONGC collapsed 9%.
Manish Hathiramani, proprietary index trader at Deen Dayal Investments, says investors should wait a day or two and re-evaluate the markets.
“Nifty has broken its 13500 support, indicating a stop-out on all long positions. Now we would have to wait and watch the markets for the next two sessions. Rush and risky trades should not be made with long or short positions on Markets. For the upside to resume, we would have to start trading above 13750-13800. To break down, we should wait a day or two and re-evaluate the markets. The strategy for the current market is to sit on the sidelines without an exchange! “he said.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited-Investment Advisor, suggests investors also adopt a wait-and-see strategy.
“Today’s market sell-off is due more to technical price correction than fundamentals, as we believe. After a significant rally without interruption, the market extended because it showed no resistance to stay above the Nifty index level. 50 out of 13750. We have You observed the market attempting several times in the past week to pass the supply zone. Failure to do so causes the bulls to spread out and record gains. Our research suggests that technical factors have shifted today to support a correction additional in the future. The downside corrective wave should find support around 12990-12960. As such, we advise traders to refrain from building a new buy position, “said Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited-Investment Advisor.
Vinod Nair, head of research at Geojit Financial Services, suggests a buy-down approach. “As we all know, the vulnerability of the market was high due to the rapid gains made in the ongoing rally that led to a low margin of safety. Buying on dips can be seen as a strategy in the market on the downside,” he said.
Global markets were also in suspense today. Travel restrictions imposed by various countries to and from the UK have added concerns of another lockdown. The European market witnessed increased selling pressure as the UK and the EU failed to reach a trade agreement before the decided deadline.
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