Indian equity markets were battered again on March 2, as a worsening Ukraine crisis, rising crude prices, which are stoking inflation worries, and weak GDP numbers weighed on investors.
The 30-pack BSE Sensex opened 618 points, or 1.1 percent, lower at 55,629. It touched an intra-day high of 55,755 before reversing the trend to slip to the day’s low of 55,020. They pared some of the losses to close the day 778.38 points, or 1.38 percent, lower at 55,469.
The Nifty started the day 200 points lower but rose to the day’s high of 16,678.only to slip to 16,478.65. At close, the Nifty was down 187.95 points, or 1.12 percent, at 16,605.95.
“The strengthening of war drowned the global market, alarming the Indian market to start with substantial weakness,” said Vinod Nair, Head of Research at Geojit Financial Services.
The negative effect was more on large-caps in-line with the weak Q3 GDP data and downgrade of FY22 growth to 8.9 percent from 9.2 percent by NSO.
The broader indices, too, were hit but not as bad as the benchmarks. The BSE midcap and smallcap indices ended lower by 0.17 and 0.12 percent, respectively.
“Mid & smallcaps outperformed, in the context of the recent carnage of the broad market, making them a better pick,” Nair said. “It makes sense to deploy the surplus cash in your portfolio in a step-by-step manner, assuming stability in the future on a medium to long-term basis”.
India VIX, which indicates the degree of volatility traders expect over the next 30 days, continued to remain high and moved up 2.3 percent from 28.57 to 29.23 levels.
The weakness subsided by the end of the day. “However, volatility is expected in the near term, given the boiling crude price, state election outcome, and the Fed policy status in the coming weeks,” Nair said.
Investors will also be closing tracking what the US Federal Reserve chairperson Jerome Powel tells the Congress about the state of the American economy in a testimony spread over two days, beginning late March 2.
Stocks and sectors
On the BSE, metal, oil & gas and power indices were the gainers. The metal index rose the most at 4.6 percent, power index inched was up 1.4 percent, while oil & gas gained 1 percent. Auto and banks were the top losers.
Maruti Suzuki, Dr Reddy’s Laboratories, Asian Paints, Bajaj Auto and Hero Motocorp were the top Nifty losers, slipping between 4.5 and 6 percent.
Coal India, HDFC Life, SBI Life Insurance, Tata Steel and Hindalco were the top Nifty gainers, up 4.6 to 9 percent each.
A short build-up was seen in Maruti Suzuki, Dr Reddy’s and Crompton, while a long build-up was witnessed in Coal India, GNFC and HDFC Life Insurance.
Among individual stocks, a volume spike of more than 387 percent was seen in MCX, 199 percent in Bajaj Auto volumes and 195 percent in HDFC Life Insurance.
On the BSE, of the 3,458 stocks traded, there were 1,652 declines, 1,692 advances, while 114 stocks remained unchanged.
Outlook for March 3
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd
Markets retreated sharply but came off the day's lows as bearish sentiment prevailed across the global indices, which weighed on local investors.
The continuing war between Russia and Ukraine has forced investors not to take bullish bets till the time the conflict subsides.
The Nifty has maintained a lower top formation, while on the daily chart, it formed a bullish Harami candlestick which supports a pullback rally.
The short-term texture is weak and a fresh rally is possible only after the index breaches 16,680. Above it, the Nifty can rally up to 16,750-16,800. The index can slip to 16,550 and 16,500 if it remains below 16,650.
Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas
The Nifty is seeing a short-term consolidation in the 16,200-16,800 range for the last few sessions. The recent bounce fizzled out near 16,800, which is now acting as resistance as per the principle of role reversal.
On the downside, however, it received support near the hourly lower Bollinger Band. It formed a Popgun pattern on the hourly chart and is once again poised for a bounce towards 16,800.
On the downside, 16,500-16,480 is the near-term support, with major support at 16,200.
Mohit Nigam, Head-PMS, Hem Securities
Investors have to be a little cautious as the near term seems a little uncertain but we have a positive outlook on Indian equities in the long term and believe that one should incrementally invest on every dip.
On the technical front, 16,400 and 17,000 are immediate support and resistance.
For the Bank Nifty, 34,800 and 36,100 are immediate support and resistance.
Santosh Meena, Head of Research, Swastika Investmart Ltd
We are in a structural bull market like 2003-07 and there were three corrections of more than 30 percent in the last bull run.
We are seeing the first meaningful correction in the market and long-term investors should not panic because it is just taking out weak hands before resuming the upmove.
This correction will provide a good buying opportunity where major wealth can be created in the next three-five years. Therefore, long term investors should stay invested and look for buying opportunities.
Short-term traders should stay light amid uncertainty, where 16,200 should be the stop-loss for long positions.
Investors should focus on the domestic economy facing sectors like capital goods, infrastructure, real estate, banking, etc.
IT sector may continue to do well. The auto sector is also providing favourable risk-reward opportunities after a period of underperformance.
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.
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