Global markets face the heat amid renewed concerns about a further delay in economic recovery, as the world continues to grapple with the relentlessly spreading Covid-19 pandemic. The resurgence of new infections in Europe has raised concerns about the likelihood of new closures in certain geographies.
Stock market investors lost 3.91 lakh crore rupees in Thursday’s loss as the market capitalization of BSE-listed companies slipped to Rs 148.79 lakh crore, and Sensex lost more than 1,000 points to close. at 36,554, while Nifty fell 326 points to close at 10,806.
“Global risks are now playing on the US dollar rally indicating risk aversion and many investors are finally realizing that,” said Sandip Sabharwal, owner of asksandipsabharwal.com, adding that there could be a W-shaped rally. on the market instead of a V-shaped one.
Sabharwal also said that American investors are now also playing with the risk of the presidential election and the impact of that on the equity markets potentially.
Foreign Institutional Investors (FII) have sold Rs 8,410.7 crore of Indian shares so far this week and are likely to raise more money in the coming days.
“Markets were ignoring a lot of those risks before when there was a frenzy and I think now those risks are developing. So I guess we could see some rebound from current levels because markets fell around 800-900 points in a short period of time, but then we should see lower levels for the next two weeks before the market stabilizes. ” Sabharwal said in an interaction with ET Now.
Also technically, all the indicators indicated that we may see more red on the screens over the next few days than green.
According to Nagaraj Shetti, technical research analyst at HDFC Securities, Nifty’s short-term trend has been drastically reduced and there is the possibility of further weakness in the short term.
“Any attempt to rebound lower to 10,900-10,950 could be an opportunity to sell higher in the near term. Our next downside target to watch is around 10,200, which could be reached in the next two weeks. Immediate support is around 10,560, ”he said.
Benchmark Sensex was up 54 percent from its March lows to its recent high of 39.4671.31 seen on August 28. These very strong gains have been underpinned by easy global liquidity, even as the coronavirus pandemic continued to tighten its grip and hurt businesses across the spectrum.
“Our market had risen substantially from the March lows and some correction was imminent. I would regard this as a healthy correction, which will surely come sooner or later, ”said Vaibhav Sanghavi, Co-CEO of Avendus Capital.
The dollar index, which tracks the dollar against a basket of six other currencies, has recovered from recent lows and is seen as a direct variable of flows to emerging markets. When the dollar appreciates, there are riskier asset outflows, such as emerging market stocks.
Sanghavi said that, at the moment, there is a certain amount of refunds in the ME basket in general. There could be more downsides in the coming days, but the possibility of a big correction is unlikely.
“While it is difficult to determine how low the markets can go, I don’t think we will go into a pronounced correction,” he said.
However, some were a bit optimistic.
“I think 10,800 could be decent support and maybe we can see some recovery. Even if it falls further, I doubt that we can fall below 10,500. It is more likely to be a stop, rather than a pause, ”said Abhimanyu Sofat, head of research at IIFL Securities.
Sofat believes that the rally will be led by the defensive group: the pharmaceutical and IT sector.
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