Monday blues: Sensex tanks over 1,500 pts; what should investors do?

High inflation in the US roiled global markets today including in India, which has remained volatile since Russia started the invasion of Ukraine on February 24 this year. Sensex and Nifty extended losses for the second straight session today, following losses in their US and Asian peers. Sensex tanked 1,569 points intraday to 52,734 today against the previous close of 54,303. Nifty fell up to 452 points to 15,749 against Friday's close of 16,201.

Bajaj twins, IndusInd Bank, ICICI Bank, TCS, Tech Mahindra were the top Sensex losers, falling up to 5.56 per cent today. Nestle, HUL and PowerGrid were the only Sensex gainers, rising up to 0.59 per cent.

Market cap of BSE-listed firms fell to Rs 246.14 lakh crore today against Rs 251.81 lakh crore market cap in the previous session, translating into a loss of Rs 5.67 lakh crore.

Market breadth was negative with 651 shares trading higher against 2,623 stocks falling on BSE. 125 shares were unchanged. BSE mid-cap and small-cap indices fell 481 points and 590 points, respectively in trade today.

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they offloaded shares worth Rs 3,973.95 crore on Friday, as per exchange data.

Also read: Rs 5.67 lakh crore investor wealth lost on D-Street as global markets sink

Meanwhile, rupee hit a record low of 78.29 against the US dollar in early trade on Monday. Rupee ended at 77.83 on Friday when it hit its previous low of 77.93 against the American currency.  

Here's a look at what experts said on how to approach the crash in the Indian equity market today.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

"The near-term market trend is weak. The May US inflation print at 8.6 per cent against the market expectation of 8.3 per cent is likely to turn the Fed more hawkish with a series of 50 bp rate hikes taking the terminal rate by mid 2023 above 3.5 per cent. Such a scenario would be negative for risky assets like equity, particularly in the context of declining global growth. The Indian market will stabilise only when the US market stabilises. Therefore, investors may wait and watch till clarity emerges on the market trend. One silver lining is the 7.1 per cent increase in IIP which indicates that the Indian economy is doing well. Therefore, long-term investors can use the dips in the market to buy high quality economy-facing stocks like capital goods, banking, telecom and export segments."

Share Market Live: Sensex tanks 1,450 points, Nifty below 15,800; LIC falls 3%

Santosh Meena, Head of Research, Swastika Investmart

"The record-high inflation numbers announced in the USA on Friday have created a huge sell-off in the global equity markets. The markets expect Fed to become more aggressive to tame the entrenched inflation; this will lead to huge outflows of FIIs  and FPIs money and further depreciation of INR. To be honest, today's fall is nothing new; it's just a reality check as the majority of stock prices had moved far away from their fundamentals or intrinsic values. Markets often need trigger events to comply with the universal law of mean reversion and the Russia-Ukraine War is that event this time.  Markets often get confused between risk and uncertainty, risk is the permanent loss of capital whereas uncertainty means situations involving imperfect or unknown information. Uncertainty often leads to correction and once it subsides, the markets normalise. In short, we recommend investors to see the big picture, it is true that inflation is going to stay for a while and affect the profits of corporate India, but in the medium to long term, there are many companies with good fundamentals, robust financials, and competitive advantages that are going to perform well. Further, India is better placed than its peers with respect to growth factors and the ability to fight the current inflation. Thus, the current uncertain times are best to lap up such quality stocks and investors can use the buy on dips strategy, however, in the near term, the markets are going to be volatile."

Prashanth Tapse, Vice President (Research), Mehta Equities

"Gap-down markets as inflation jitters continue to haunt global markets. We suspect, Nifty will lack direction in the afternoon session as the key driver of sentiment hinges now on

a)    The FOMC policy Outcome (June 15th

b)    US 10-year Treasury spiked to 3.157%. The street now expects it to flirt with 4% by the end of 2022

c)    India's CPI inflation data on June 13 and WPI inflation to trickle in on June 14

A high inflation reading is bolstering expectations that the Federal Reserve will continue to aggressively hike rates in the second half of this year, even with signs of economic slowdown Honestly speaking bear holds grip on markets very tight hence, we advise investors to have "Wait and watch strategy "and not get into the trap.

Once the above economic data is out and market discounts that then, we can enter markets in a phase wise manner. On the downside, the line in the sand is at Nifty's support at 15,793 mark."

Yash Gupta- Equity Research Analyst, Angel One

"Nifty down by 400 points and Bank Nifty falls by 1,150 points as weak global cues on back of US inflation number above market expectations. Global markets are also down by 2%-3%. We expect the market to consolidate at these levels, long-term investors can use this market dips to buy good quality stocks, short-term investors need to be cautious as we expect volatility to continue in the market on the back of global as well as domestic news flows."

Asutosh Mishra, Head Of Research, Institutional Equity, Ashika Group

"Market correction can be utilized as a good opportunity for investors to rejig its portfolio. Focus on how in the past these deep corrections may have given us the opportunity to position our self for profitable trade/ investing. If we look around us we will find many businesses whose prospects look good in these difficult time. Use this time to invest in top company/ leaders from these sector/ sus sector Many times, we miss to add some of the stock we like very much. In this correction we get opportunity to acquire these stock as much reasonable valuation Exit from the stock where you are not confident about future growth trajectory or there are concerns due to change in macro environment."

 

Manoj Dalmia, founder and director, Proficient Equities

"Indices have severe profit-booking and have made days low of 15682 about  3% down, Nifty Midcap and Nifty Smallcap have also tumbled 2.68 per cent & 3.45 per cent, respectively.  

India VIX has surged about 13 per cent while all the sectors are in deep red. Investors should book small profits in their recent investments if made on a swing basis and avoid heavy buying instead some small quantity can be bought on every dip in case of value stocks and keeping a cash reserve is good during this time as every dip can be seen as a investment opportunity ."

Ravi Singhal, Vice Chairman, GCL Securities Limited

"As we saw after the bloodbath in the US market on Friday, we are seeing the same in the Indian market. Mostly because of the US CPI data and the Covid surge in China and India. Now the market believes there will be more rate hikes from global central banks, but there is still some pain on our side as 15200 may be reached in the coming weeks."

Ravi Singh, vice president and head of Research, Share India

"Weakness in equity, geopolitical tensions, negative sentiments in the market across globe, elevated commodity prices, disrupted supply chains, outflow of FIIs, persistent high inflation and weaker rupee has dampened the investors confidence and increased the market volatility. Investors are cautious ahead of scheduled central banks meeting this week. Nifty may continue the sell off towards the levels of 15500. However, 15500 is holding a strong support and we may see a bounce back in the index from that levels.

Nifty may continue the sell off towards the levels of 15500. However, 15500 is holding a strong support and we may see a bounce back in the index from that levels. Investors can take long positions around the support, till then wait and watch strategy is recommended."