Markets Got A Reality Check Through Short-Term Correction, Say Analysts

Equity markets are undergoing a short-term correction, but the long-term tone looks bullish, according to analysts.

"The Nifty 50 has not gone that bad, but the markets are in complete chaos," Hemen Kapadia, senior vice president-institutional equity at KR Choksey Shares and Securities Pvt., told NDTV Profit on Monday.

The markets were due for a correction as many of the stocks were all over the place, he said. It is majorly the mid and small caps that have been affected along with the Nifty Bank, according to him.

"It's going to take time to play out, but I am not bearish, as important levels have not been broken and currently, things are not so bad. But we have got a reality check," he said.

The NSE Nifty 50 closed 166.45 points, or 0.76%, lower at 21,616.05 and the S&P BSE Sensex fell 523 points, or 0.73%, to end at 71,072.49 on Monday.

The indices opened on a cautious note and moved into the red, led by selling in heavyweight banks, metals and mining companies, according to Avdhut Bagkar, technical and derivatives analyst at StoxBox.

A consolidation was expected after a humongous rally in the markets, both domestically and globally, according to Sudip Bandyopadhyay, group chairperson at Inditrade Capital Ltd. The market structure is still intact and from a long-term perspective, it will maintain a positive tone, he said.

"We will maintain a positive bias in the medium to long term, but short-term correction or volatility is bound to happen," he said.

Bandyopadhyay highlighted that many of the public sector undertakings, majorly in defence and railways, “have run ahead of the ground reality." Stocks in these sectors will yield benefits over a period, but the markets have responded to these benefits too early, according to him.