Investor wealth worth nearly Rs 24 lakh crore in market cap has been eroded in the last six trading sessions as persistent foreign fund outflows and global trade concerns kept investors on edge. Adding to the negative mood were continued valuation concerns in the midcap and smallcap segments.
However, analysts believe the market is in oversold territory and a short-term rebound could be on the cards. The same was witnessed today as after a weak start on Wednesday, the headline indices staged a sharp recovery in intraday trade. Earlier in the day, both the Sensex and Nifty extended losses, with the Nifty slipping below the crucial 23,000 mark and the Sensex breaching the 76,000 level.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, advised investors to shift their focus to large-cap stocks. "The current weakness presents an opportunity to move from mid and smallcaps, which are still overvalued, to fairly valued largecaps. While a pullback is likely, sustained foreign institutional investor (FII) selling could cap the upside,” he said.
The 30-share BSE benchmark plunged 905.21 points or 1.18 percent, to hit a low of 75,388.39, while the broader Nifty tumbled 273.45 points or 1.18 percent to 22,798.35. Over the past five sessions, the Sensex has slumped 2,290.21 points, or 2.91 per cent, and the Nifty has lost 667.45 points, or 2.81 per cent.
Is the market at a near-term bottom?
Analysts remain divided on whether the correction has run its course or if further declines are in store.
Anand James, Chief Market Strategist at Geojit Financial Services, said the downside momentum appears to have paused after hitting key support levels, raising the possibility of a recovery. "Upswings have been challenged earlier than expected, but declines halted after testing our downside target of 23,060. This encourages us to look for a recovery attempt today," he noted.
Ajit Mishra, Senior Vice President (Research) at Religare Broking, said the breach of the 23,200 level has derailed hopes of a strong bounce-back. "A potential retest of 22,800 is likely. The bigger concern is the heavy selling pressure in midcap and smallcap stocks, which appear more vulnerable. Traders should remain cautious and focus on risk management," he added.
Echoing similar concerns, Prashanth Tapse, Senior Vice President (Research) at Mehta Equities, said the market sentiment remains fragile. “Dalal Street is gripped by pessimism as fears mount over further declines if the Nifty slips below the 23,000 mark. Key factors weighing on sentiment include Rs 1 lakh crore in FII outflows this year and ongoing concerns over Trump’s tariff threats,” he pointed out.
Foreign Institutional Investors (FIIs) continued their selling spree, offloading equities worth Rs 4,486.41 crore on Tuesday. So far in February, they have dumped stocks worth Rs 10,112 crore, after selling Rs 78,027 crore in January.
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