Indian equities continued to reel under selling pressure in the intraday trade on March 25, extending the sharp selloff of almost 2 percent in the previous session. The BSE Sensex plunged 944 points and Nifty fell to 14,264 in intraday trade.
At close, the Sensex was down 740 points, or 1.51 percent, at 48,440.12 and Nifty was at 14,324.90, down 225 points, or 1.54 percent. The selling was widespread as the BSE midcap and smallcap indices fell 2.22 percent and 1.85 percent, respectively.
A sharp rise in COVID-19 cases in India as well as several European countries and reports of lockdown seem to have eroded the risk appetite of investors.
"The uncertainty in the market continues with increasing risk arising from the second wave of COVID attack in India in the context of the third wave in parts of Europe," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Other than the coronavirus, hardening bond yields, a stronger dollar and rising inflation are also keeping the sentiment low. The market may remain volatile for some time owing to these factors.
"The relief is that the second wave of coronavirus is less intense than the first. This and the fact that vaccination is accelerating is likely to support markets. In this race between COVID spread and vaccination, the latter will eventually succeed. The market knows that. So, volatility is here to stay for some time before stability emerges," Vijayakumar said.
Buy in this market
Despite the negative factors, analysts see this bearish mood as an opportunity to buy quality stocks. “Any sort of knee-jerk reaction is going to be an interesting opportunity for investors to buy in,” Pramod Gubbi, co-founder of Marcellus Investment Managers said in an interview with CNBC-TV18.
“There are a lot of investors feeling that they have been left out in this rally in the past 12 months, they have been waiting for the correction to get in and if we see a meaningful correction, a lot of those investors will jump in as well,” Gubbi added.
He believes the market will react to possible newsflow in the short term.
“We need to look at it a little more positively here. The development of the vaccine is clearly positive news. It is just a matter of implementation and the speed of implementation here,” he added.
Vijayakumar said a major trend in the market now is the comeback of pharma stocks in recent days and the weakness in banking stocks.
"Pharma may continue to find favour but high-quality banking stocks are unlikely to languish. Q4 results of IT, banking majors and top-rung FMCG would be good. The market response will happen before the results are announced," he said.
Harsha Upadhyaya, CIO-Equity, Kotak Mutual Fund, underscored in an interview to CNBC-TV18 that the market is in a correction mode now and any further correction would be a good opportunity to accumulate.
"When you are staring at a large amount of earnings growth over the next two quarters, it is difficult to believe that market will make a very large correction," he said.
“So to that extent, we believe that correction would be shallow and also more time-wise and that should give us opportunities to fill up our portfolio in pockets where we believe there could be stronger recovery,” Upadhyaya added.
He believes the pharmaceutical sector may perform better than the IT sector as against the benchmark indices. “IT has done quite well and it is still at higher levels. Compared to IT, pharma from hereon could give better performance as against the indices,” he said.
Disclaimer: The above report is compiled from information available on CNBC-TV18 and public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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