Indian markets fell sharply today, snapping its recent record-breaking streak. The Sensex ended over 1400 points lower at 45,553 after sliding over 2,000 points at day's low. The Nifty ended 3.2% lower at 13,328 with broader markets also seeing a big selloff. The BSE midcap and smallcap indices slumped over 4% each. Though many analysts were expecting a consolidation after the recent upmove, the intensity of today's crash took everyone by surprise.
"The new variant of the coronavirus in the UK spooked markets as we witnessed intense selling in pivotal throughout afternoon trade. While the Street was bracing for a correction this week after a sharp upmove, the sheer velocity of the fall across broader markets took the bulls by surprise as practically none of the key indices constituents were in the green today," said S Ranganathan, Head of Research at LKP Securities.
All the Sensex 30 constituents ended in red. ITC, NTPC, SBI, M&M, IndusInd Bank slumped 5% to 7% while ONGC cracked 9%.
Manish Hathiramani, proprietary index trader at Deen Dayal Investments, says investors should should wait for a day or two and re-evaluate the markets.
"Nifty has broken its support of 13500 which indicates a stop-out on all long positions. We would now need to wait and watch the markets over the next couple of sessions. One should not take hasty and risky trades by going long or short on the markets. For the upside to resume, we would need to start trading above 13750-13800. In order to break on the downside, we should wait for a day or two and re-evaluate the markets. The strategy for the current market would be to sit on the sideline without a trade!" he said.
Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited-Investment Advisor, suggests investors to also adopt a wait-and-watch strategy.
"Today’s market selloff is more due to technical price correction in nature than the fundamental as we believe. After a significant rally without interruption, the market was extended as it failed to show resilience to stay above the Nifty 50 Index level of 13750. We have observed the market to attempt multiple times over the last week to get past the supply zone. Failure to do so causes the bulls to distribute and profit booking. Our research suggests that technical factors are shifted today to support a further correction in the future. Any corrective wave down should find support around 12990-12960. As such, we advise the traders to refrain from building a new buying position," said Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited-Investment Advisor.
Vinod Nair, head of research at Geojit Financial Services, suggests a buy-on-dips approach. "As we all know, the vulnerability of the market was high due to quick gains made in the ongoing rally leading to low margin of safety. Buying at dips can be considered as a strategy in the falling market," he said.
The global markets were also on the tenterhooks today. Travel restrictions imposed by several countries to and from UK have added concerns of yet another lockdown. European market witnessed further selling pressure, as the UK and EU failed to reach a trade deal before the decided deadline.
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December 21, 2020 at 06:12PM
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Should you buy now after today's Sensex crash? Analysts suggest wait-and-watch mode - Mint
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