Sensex tumbles 1,844 points in three sessions; is there more pain ahead?

The Indian stock market seems to have entered the correction phase, indicates the downfall in the last three sessions. Sensex, which was racing towards the 62K level despite rising Omicron cases in India, has lost 1,844 points since January 17 this year. The 30-stock index closed at 59,464 today, down 634 points against the 61,308 level on January 17.

Similarly, Nifty has tumbled 551 points in three days. The index closed at 17,757, down 181 points today against the 18,308 level on January 17.

Market cap of BSE-listed firms fell to Rs 273.21 lakh crore today, implying a decline of  Rs 6.81 lakh crore in investor wealth in three sessions. On January 17, market cap of BSE listed firms stood at Rs 280.02 lakh crore.

Concerns over global inflation and likely Fed rate hike have pulled the Indian market lower for the third consecutive day.  The rising bond yields in the US have prompted foreign investors to withdraw funds from highly valued markets like India, said analysts.

Also read: Sensex ends 634 points lower, Nifty falls to 17,750; Bajaj Finserv, Infosys, TCS top losers

Sensex tanked 1,030 points intra day to 59,068 on an intra day basis today. Similarly, Nifty tumbled 290 points intra day, before recovering losses partially. The current correction comes as a shock for investors who were expected a pre-budget rally on the bourses.

Here's a look at what analysts said on the direction of the market post the recent correction.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said,"For the traders, the 20 day SMA or 17700 would be the sacrosanct support level. Trading above the same, a pullback rally could lift the index up to 17850-17900 levels. However, a fall below 17700 could see the index retest the level of 17650-17600."

Prashant Tapse, Vice President (Research) at Mehta Equities said, "Nifty traded with sharp losses as sentiments were driven negatively by the rising U.S Treasury yields that has soared to a two-year high of 1.90%, while the yield on the 2-year bond reached 1.06%. On the backdrop, remains the narrative of aggressive Federal Reserve's tightening of its monetary policy. The street fears that the US Federal Reserve will have to accelerate further its tightening pace. Also, breaking the back of this bullish market are rising oil prices which have jumped to seven-year high amid supply concerns and drone strikes."

Deepak Jasani, Head of Retail Research, HDFC Securities said, "On a day when the Nifty fell for the third session, advance decline ratio ended in the positive. This suggests some stability in the broader markets though the frontline stocks continue to face the brunt of selling pressure from institutions. Nifty could now find support at 17614 while 17879 could act as a resistance in the near term."

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities said, "Nifty broke its momentum support levels of 17900 and tested the 17700 levels. For the short term, Selling pressure can push the index towards 17350-17450 mark. The medium term outlook remains intact as we don't see any signs of trend reversal. On the higher side expect 19000-19500 to be conquered going ahead. Value is seen in the Energy and NBFC space while other high beta sectors are expected to remain volatile."

Rahul Sharma, Co-owner, Equity 99 said, "The volatility in the market due to the weekly expiry and heavy weights like Reliance and IT stocks dragged the market down, despite the rise in Asian peers. We expect market to see a upward movement in Friday's trade. Investors are advised to take advantage of such downfalls to accumulate quality stocks on major dips. There will be volatility in the market till the budget.

Post today's fall, 17,700 will act as a major support for the benchmark index, If this level is breached then we might see 17650-17600 levels too. On the upper side, 17,815 will act as a major hurdle. If this level is breached, then next resistance is around 17920 levels post which we might regain 18k levels."