Benchmark indices BSE Sensex and NSE Nifty 50 fell sharply on Thursday to plunge around 3% after Russian President Vladimir Putin announced military operations in Eastern Ukraine. The expiry of February derivative contracts caused additional volatility on top of what is being caused by geopolitical risks. Both benchmark indices have now fallen over 10 per cent from all-time highs made recently, and were trading at their lowest levels since mid-December. The growing concern surrounding the deteriorating Ukraine crisis has pushed global stock markets into correction mode, said traders, analysts. Investors are advised to wait and watch the unfolding situation before taking any major investment decision.
What’s dragging India’s share markets today?
“We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising,” said Parth Nyati, Founder, Tradingo.
“Indian markets have been trading on a weaker note for the last few trading sessions following global peers due to pessimistic sentiments in global markets and uptick in US treasury yields continued to support the dollar. The volatility is also increasing in the market,” said Likhita Chepa. Senior Research Analyst at CapitalVia Global Research.
Technical view: Where will Nifty fall stop – 16000, 15000, 14000?
“Technically, Nifty has slipped below its 200-DMA which may lead to further weakness towards the 16000 level while 16400 is an intermediate support level. We can expect a bounceback from the 16000 level but confidence will be back only if Nifty manages to cross the 17200 level. If Nifty breaks the 16000 level then the worst-case scenario could be 14000 but still we will remain in a long-term bull market. Bank Nifty has also slipped below its 200-DMA where 35500 is the next important support level while 34000 is the next major support. On the upside, it has to cross the 37500 level to gain any strength,” said Parth Nyati, Founder, Tradingo.
Selloff may continue for more correction of 8-10%; watch 15500 on Nifty
“The market panic selling is triggered by the latest developments in Ukraine Russia tensions. The selling may continue for a more correction of 8-10% in the benchmark indices. Nifty may touch the level of 15500 in this scenario. It is advisable that all investors should follow ‘wait and watch’ strategy and avoid any fresh entry at the current juncture. Long term investors having an investment horizon of 3-5 years will get a good opportunity to avert their portfolio, once the global situation stabilizes,” said Ravi Singh, VP & Head of Research, Share India Securities.
What should investors do – ‘Buy the Dip’ or ‘Wait it out’?
Overall market valuation has turned attractive, offering opportunities to accumulate quality stocks for long term portfolios. However, experts also cautioned against making hasty investment decisions, and advised investors to watch for more clarity. “It would be practically impossible to say when how much the markets will fall as they are guided by external factors and they tend to defy technicals during such times. Investors should keep exposing small portions of their investable capital to pick up quality stocks with each such opportunity,” said Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services.
