Market extended profit booking in the second week ended January 28 losing another 3 percent amid high volatility as investors remained cautious on hawkish Fed, rising crude oil price, geo-political tensions and persistent FII selling.
In the last week, BSE Sensex declined 1,836.95 points (3.11 percent) to end at 57,200.23, while the Nifty50 lost 515.2 points (2.92 percent) to close at 17,101.95 levels.
Among sectors, Nifty Information Technology index lost 6 percent, Nifty Realty index declined 5 percent and Nifty Metal index fell 4.4 percent. However, Nifty PSU Bank index added 7 percent.
Among broader indices, BSE Smallcap index fell 3.4 percent and Midcap indices shed 3 percent.
Nine smallcap stocks gained 11-58 percent: Sharda Cropchem, Orient Bell, PSP Projects, Khaitan Chemicals and Fertilizers, HT Media, Gujarat Ambuja Exports, Gujarat Mineral Development Corporation, MMTC and TV18 Broadcast.
On the other hand, 43 stocks fell between 10-23 percent including Lux Industries, Indiamart Intermesh, Tata Teleservices (Maharashtra), Vikas Lifecare, Urja Global, Mahindra Logistics, Kriti Industries (India), APL Apollo Tubes and Butterfly Gandhimathi Appliances.
"This highly volatile week, the domestic market followed global reactions of Fed policy meeting, Russia-Ukraine tension and rising oil prices amid pre-budget jitters," said Vinod Nair, Head of Research at Geojit Financial Services.
"Fed in its policy announcement, reaffirmed its plan on ending the bond purchase program and hinted on possible rate hike during the March session. The volatility in global markets was further heightened on mounting geopolitical tensions in Ukraine which kept oil prices elevated on rising supply tensions."
"However, any moderation in the geopolitical situation will lead to bottom fishing. In the domestic market, banking stocks, especially PSBs, showed resilience during the week due to favorable earnings. Shares of new-age technology companies took a hit during the week due to a drop in growth of profitability amid expensive valuations," he added.
BSE Midcap index shed 3 percent with Torrent Pharmaceuticals, Jubilant Foodworks, The Ramco Cements, Vodafone Idea, Godrej Properties, PI Industries, P&G Hygiene and Health Care losing 8-15 percent.
The BSE 500 index lost 3 percent dragged by Lux Industries, Indiamart Intermesh, Tata Teleservices (Maharashtra), Mahindra Logistics, Torrent Pharmaceuticals, APL Apollo Tubes, Elgi Equipments, Trent, Vaibhav Global, Sobha, Finolex Industries, Saregama India, Blue Star, Affle India and Dixon Technologies.
"It was indeed a volatile week for our markets as ahead of the mid-week holiday, Nifty breached 17000 mark and made a low of 16836. However, the index recovered from the lows and witnessed some pullback in the last couple of trading sessions," said Ruchit Jain, Lead Research, 5paisa.com.
"Post the recent high of 18350, it initially seemed to be a normal correction within an uptrend and market participants expected just a knee jerk reaction. But the markets surprised everyone and corrected sharply to even breach the 17000 mark.
"If we look at the data, then primarily this correction seems to have been caused due to the sharp correction in the global markets and FII’s selling who sold equities in cash segment and also formed bearish positions in the index futures segment. They have even rolled over their bearish bets in the index futures segment from January to February series.
"But since the global market event of Fed policy and the monthly expiry for our markets is over, the focus would now solely be on the Budget 2022 which is likely to dictate short term trend," Jain added.
Where is Nifty50 headed?
Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services:
Equity markets have been witnessing increasing volatility over the last few days. While the US Fed outcome is now behind, several other factors including ongoing result season, Union Budget on Feb 1st and Russia-Ukraine conflicts would keep the market volatility high in the coming week as well.
Expectations are running high from the government to present a progressive budget which can revive economic growth. However, given the various state election, risk of a populist budget cannot be ruled out completely. Capital Goods, Infra, housing, Real Estate, PSU Banks, etc are some of the sectors that would remain in focus ahead of the budget.
Yesha Shah, Head of Equity Research, Samco Securities:The Union Budget will be the talk of the town, and market players' reactions to policy announcements may cause whipsaw fluctuations.
Furthermore, the automobile industry's monthly sales figures are sure to pique the interest of investors attempting to forecast future trends in auto stocks.
With the Q3FY22 results season in full swing, investors may anticipate some stock-specific fluctuations to contribute to the mood in the short term. With a busy week ahead, investors should avoid aggressive wagers and have their money ready to deploy in the scenario of a deeper panic.
Joseph Thomas, Head of Research, Emkay Wealth Management:
The coming week will be influenced to some extent by the expectations from the Union Budget which will be presented on Feb 1, 2022.
The outlay on infrastructure, the expansion of the PLI Scheme, the fiscal consolidation path post the pandemic, the specific measures to boost consumption, are some of the things which the market is eagerly waiting for.
An aggressive budget along with reasonably good earnings performance could counter the pace of the sell-off in the markets to a significant extent.
Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities:
After a long time, the Nifty closed below the 50-day SMA and has also formed a bearish candle on weekly charts, which is negative for the markets.
For the bulls, 17300 would be the important breakout level to watch and if the Nift manages to close above the same, we could expect continuation of an uptrend wave up to 17450-17550 levels. On the flip side, trading below 17000 may trigger further weakness up to 16800-16700.
Also, the Bank Nifty is trading near the 20 day SMA and any movement above the same could see the index rally up to 38500-39000.
Ajit Mishra, VP - Research, Religare Broking:
All eyes are on the Union Budget now which is scheduled next week on February 1. We expect a growth-friendly budget but also expect the government to lay out a path for fiscal consolidation. Besides, earnings and global cues would remain on participants’ radar. We reiterate our cautious view and suggest continuing with hedged positions.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.