Key equity benchmarks the Sensex and the Nifty ended with strong losses on January 18 following an across-the-board profit-booking.
The market was under pressure through the day and selling was seen in most sectors. Investors took money off the table as caution crept into the market in the run-up to the Union Budget 2021.
The 30-share pack Sensex closed 470 points, or 0.96 percent, down at 48,564.27, while the Nifty finished 152 points, or 1.06 percent, down at 14,281.30. With this, the market extended the losses into the second consecutive session.
Mid and smallcaps underperformed their largecap peers. The BSE midcap and smallcap indices closed 2.01 percent and 1.89 percent lower, respectively.
Barring BSE energy (up 1.10 percent) and consumer durables (up 0.77 percent), all sectoral indices ended with losses. The metal index fell 4.14 percent, while healthcare, auto, utilities, basic materials, telecom and power declined over 2 percent each.
"Markets traded weak for the most part of the day and closed in the red as fears of price cuts led to profit-booking in metal stocks in the wake of rising coking coal prices. Afternoon trade witnessed selling in oil & gas stocks too, causing the market breadth to deteriorate," said S Ranganathan, Head of Research at LKP Securities.
Here is what experts think that investors should do on January 19:
Vinod Nair, Head of Research at Geojit Financial Services
The market has got choppy ahead of the Union Budget and due to weakness in an expensive global market.
A good part of the economic gains is well factored in by the upside of the last 11 weeks. A short-term correction was being anticipated for some time, it will be good for the market on a long-term basis.
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
Unusual strength in the dollar index and a sustained run-up in the commodities battered the market sentiment.
On a daily chart, the Sensex and the Nifty formed a bearish continuation formation following a Doji candle on the weekly chart.
As the market closed below the crucial support of 14,350/48,800, it could fall to 14,100/48,100 or 14,000/47,900 in the next couple of days.
On the higher side, 14,350/48,800 and 14,460/49,150 would be major hurdles.
The strategy should be to trade on bounces and keep a final stop loss at 14,470/49,200. Select buying is advisable between 14,100 and 14,000/48,100 and 47,900, strictly with a medium-term view.
Ajit Mishra, VP-Research, Religare Broking
The news of fresh COVID cases in China spooked markets across the world, including India, as participants are worried about global economic recovery.
At the same time, we are seeing a noticeable rise in volatility on the domestic front too, thanks to the prevailing earnings season.
Amid all, we reiterate our positive yet cautious view and suggest focusing more on stock selection and risk management. On the index front, the Nifty has critical support at 14,100.
Deepak Jasani, Head of Retail Research, HDFC Securities
The near-term downtrend in the Nifty gained momentum on January 18, as stocks, more so in small and midcap categories, seemed to have run out of steam.
In the process, the up-gap made on January 11 has been filled. The US markets are closed for the Martin Luther King holiday on Janaury 18. Hence, our markets may not get any overnight cues from there.
For Nifty, 14,040-14,215 band is the next support area. On rises, 14,358 could act as a resistance.Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.