Taking Stock | Markets crash for the fifth straight session, focus on Fed meeting

It was a manic Monday for the Indian equity benchmarks that tanked for a fifth straight session on January 24, losing nearly 3 percent each on weak global cues and worries ahead of the Federal Reserve meeting.

At close, the Sensex was down 1,545.67 points, or 2.62 percent, at 57,491.51, and the Nifty plunged 468.10 points, or 2.66 percent, at 17,149.10 in their worst showing in three weeks.

The market opened on a negative note amid weak global markets and extended the selloff, with investors worried about the outcome of the two-day Fed meeting that begins January 25 and rising geopolitical uncertainty. Continued selling by FIIs added fuel to the selling pressure.

"Weak global cues ahead of the Fed meet saw a fierce sell-off in new-age recently listed firms and stocks with high FII ownership. As the VIX rose more than 25 percent in late afternoon trade today, all sectoral indices were deeply in the red as the BSE Sensex breached the 57K mark," said S Ranganathan, Head of Research at LKP securities.

Shares of technology startups like Paytm, PolicyBazaar, Nykaa, Zomato and CarTrade Tech that hit the bourses last year are now trading at 20-50 percent discount to their issue price.

Also read: Market nosedives for fifth straight session, investors lose over Rs 17.5 trillion: 5 reasons why

The broader markets were pounded as the small and midcap indices lost almost 5 percent. Though indices pulled back a bit in the last hour, the fact that a little more than 100 shares advanced sums up the day’s sentiment, he said.

"With the Nifty losing over a thousand points in the last five sessions, investors are bracing for higher volatility going forward," Ranganathan added.

Also read: Bloodbath on the Street as indices drop 3% each: Here’s what experts have to say

In the last five trading sessions, Sensex has lost 3,817.4 (6.22 percent) and Nifty 50 1,159 points (6.33 percent) eroding Rs 1,951,842.77 crore on investors wealth.

JSW Steel, Bajaj Finance, Tata Steel, Grasim Industries and Hindalco Industries were the top Nifty losers, while gainers included Cipla and ONGC.

Among sectors, Nifty auto, energy, FMCG, IT, PSU bank and metal indices shed 2-5 percent.

The broader indices underperformed the main indices with BSE midcap and smallcap indices falling 4 percent each.

Also read: Retail investors nurse wounds of new-age tech stocks sell-off with memes

Stocks and sectors

All the sectoral indices ended in the red with auto, bank, metal, IT, power, pharma, realty, FMCG, capital goods down 1-6 percent.

Short build-up was seen in the Astral, Hindustan Copper, Godrej Properties and Zee Entertainment Enterprises.

Among individual stocks, a volume spike of more than 200 percent was seen in Granules India, Piramal Enterprises and SBI Cards.

More than 200 stocks, including TCI Finance, Easun Capital Markets, Adani Transmission and ABB India, hit a 52-week high on the BSE.

Outlook for January 25

Ajit Mishra, VP-Research, Religare Broking

We expect volatility to remain high as investors await the Fed meet outcome. Moreover, pre-budget jitters, earnings announcements and upcoming monthly expiry would further add to the choppiness.

Traders should limit leveraged positions and focus more on risk management. Investors, on the other hand, should see this correction as an opportunity to buy quality stocks at a good bargain.

Rupak De, Senior Technical Analyst at LKP Securities

The index is likely to remain weak, however, a sustained trade above 17,150 may induce a relief rally in the market. On the other hand, a fall below 17,150 may trigger correction towards 17,000.

Amar Ambani, Senior President & Head–Institutional Equities, YES Securities

While a further 500 points downside cannot be ruled out in the Nifty, on the brighter side, the stock market is much lighter and healthier, heading into the Union Budget, after the high in mid-October 2021.

Corporate earnings have been positive, so far, and Omicron didn’t disrupt the economy materially. The structural story remains intact and I am confident that Nifty will achieve a higher high in 2022 than what we saw in 2021.

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 making any investment decisions.