On Tuesday, the Indian stock market was met with intense selling pressure and the major market indices closed in the negative amid poor international leads and with the profit-taking effects in most sectors. BSE Sensex dropped by more than 450 points and the NSE Nifty 50 dropped under the very important 25,100 mark pulled down by the fall of pharma, PSU banks and metal stocks

Market Snapshot

BSE Sensex: 82,420 ▼ –455 points (–0.55%)

NSE Nifty 50: 25,075 ▼ –140 points (–0.55%)

Nifty Bank: 52,380 ▼ –0.48%

India VIX: Increases to 13.8, which implies the increased volatility in the future

Sectoral Performance

Majority of the sectoral indices performed in the red. Pharma, the banking sector and the metal industries incurred the greatest loss and IT and FMCG were able to contain the general losses.

Nifty Pharma: ▼ 1.3%

Nifty PSU Bank: ▼ 1.1%

Nifty Metal: ▼ 0.9%

Nifty IT: ▲ 0.4%

Nifty FMCG: ▲ 0.2%

Amongst the key laggards were Sun Pharma, Cipla, SBI, Coal India and ONGC whereas Infosys and HUL gave the indices some cushion

Broader Market Weakness

The larger markets followed the same trend of the benchmark whereby the Nifty Midcap 100 and Nifty Smallcap 100 indices fell by 0.6% and 0.8, respectively. Analysts pointed the weakness due to profit booking following a robust rally and weak outlook before major economic data releases

Global Market Cues

The world equity markets were strained with the U.S Treasury yields surging and the investors waiting to get the next inflation and interest rate figures. Mixed trading was also experienced in Asian markets as the Nikkei of Japan and Hang Seng of Hong Kong closed down

Increasing oil prices and a strengthening U.S. dollar also added to the sentiment of investor worry and worry of inflation and possible outflows of the emerging markets

Expert View

Market analysts indicated that the volatility may persist in the near future as traders readjust positions in the run-up to the earnings season and other important macro information

The markets are undergoing a natural corrective action following a vigorous upsurge. According to Nair, Vincent, Head of Research at Geojit Financial Services, investors must consider buying good stocks on the lows, especially in the banking and IT industry

Regarding global uncertainty and the rise in crude prices, he further opined that, even in the short term, the volatility can be maintained but in the long-term, the Indian equities can still be anticipated to perform well

What’s Next for Investors

The Nifty 50 is projected to have a short-term support of 24,95025,000 and has a short-term resistance at 25,300. The traders are encouraged to watch out on leveraged positions and be stock-specific

This could be taken by long-term investors as the opportunity to stock up on quality names in markets like banking, IT, capital goods and infrastructure

Market Prophesies: Be Vigilant, Find Opportunities.