Sensex, Nifty Post Worst Drop In Two Months: Here's What The Street Says

Sensex, Nifty tumbled the most in nine months during the day but recovered some of the losses by the end of trade.

<div class="paragraphs"><p>Stock market movements on an electronic display. (Photographer: Paul Hanna/Bloomberg)</p></div>
Stock market movements on an electronic display. (Photographer: Paul Hanna/Bloomberg)

India's equity benchmarks tumbled the most in nine months in during the day, tracking a global selloff on account of the U.S. Fed tapering and escalating tensions in Ukraine over a potential war with Russia.

The Sensex lost 2,053.17 points intraday, while the Nifty 50 shed 619.30 points to fall below 17,000. That's more than a 3% drop. The indices, however, recovered some of the losses by the end of the trade.

Sensex, Nifty Post Worst Drop In Two Months: Here's What The Street Says
Sensex, Nifty Post Worst Drop In Two Months: Here's What The Street Says

The Sensex closed down 2.62% and the Nifty ended 2.66% lower, the worst in nearly two months. The benchmarks have declined for five consecutive sessions, making it the longest losing streak in more than 10 months.

Sensex, Nifty Post Worst Drop In Two Months: Here's What The Street Says

All the 19 sectoral indices compiled by BSE Ltd. declined, led by more than a 5% drop in realty and metal.

The broader indices underperformed their larger peers, with the S&P BSE Smallcap falling 3.8% and Midcap shedding nearly 4.5%.

BloombergQuint spoke with market veterans about the correction, and here's what they said...

Deven Choksey

MD, KR Choksey Investment Managers

  • Globally people are more circumspect about tapering related liquidity withdrawal.

  • Losses met by traders in other products like cryptocurrencies add to concerns as those losses will have to be cleared by somebody making money elsewhere and that spillover could have adverse effects.

  • Most of the new age-companies are not fully visible on profitability, not only in India but globally.

Astha Jain

Senior Research Analyst, Hem Securities

  • Concerns over tapering of monetary stimulus, which is expected by March, has resulted in liquidity outflow.

  • The correction is caused by the fact that markets were not taking care of valuations, especially of the new-age tech firms.

  • The upcoming period will be based on fairly priced valuation stories.

G Chokkalingam

Founder and Managing Director, Equinomics Research & Advisory

  • Not concerned about the impact of tapering of monetary stimulus, as that implies that the economy is on the path towards recovery.

  • Extended period of rise in crude oil prices could adversely impact markets.

  • Rise in oil prices above $100 per barrel to lead to further correction

  • Budget is unlikely to be a major market-moving event.

  • Cumulative recovery in economy after two years cannot be punished by markets, though it cannot be rewarded as it is priced in already

  • FII investment through PE funds, venture capital have been robust, which is a positive.

  • Expect weakness in market to continue till budget as lot of investors will prefer to sit on the sidelines.

  • Do not think there would be any major crash in the markets.

  • Exports growth and pick up in agriculture (rabi, kharif crops have been productive) augur well for growth, aiding uptick in markets.

  • Arrival of new retail investors into markets has resulted in a major structural change in markets.

  • Time for the government to focus on improving aggregate demand in the economy, which would provide support to markets.

Dipan Mehta

Director, Elixir Equities

  • The current market is in a free fall with a fear factor in play, and determining a ‘bottom level’ right now is not possible. But long-term investors need not worry.

  • There is a panic-based selling in the market and the excesses built in the market from 2020 may get reversed.

  • Many overvalued stocks may also turn undervalued due to the current fall in the market.

Avinnash Gorakssakar

Head Of Research, Profitmart securities

  • Investors are worried about the tapering of monetary stimulus and that has led to liquidity moving out from the equity market. The tapering is expected in March.

  • 2020-21 was a good year for the market and on the index side even a 10% gain for this year is good as the base growth level over the last year is high.

  • Big companies in India like Asian Paints have also not been delivering good results and since Covid-19 is no longer considered a concern from a market front, corporate results are being focused on more.

  • There are a lot of rumoured stories around the upcoming Indian budget for example unconfirmed stories doing rounds on possible LTCG change etc. have concerned investors.

  • ‘The Robin Hood investors’ who came into market during gains have moved out now.

  • Cryptocurrency fall along with the global selloff has had a direct impact on the equity market as investors are now booking out from equity.