The first day of the week saw a disastrous start as the 30-share index plummeted over 1,600 points on December 20, tracking across-the-board losses amid a selloff in global markets as concerns over rising Omicron cases spooked investors.
Sensex crashed over 1,600 points to hit an intraday low of 55,333.71. Similarly, the Nifty tanked over 500 points to 16,470.10.
Persistent foreign fund outflow weighed on investor sentiment. Foreign institutional investors (FIIs) sold shares worth Rs 2,069.90 crore on December 17, and domestic institutional investors (DIIs) bought shares worth Rs 1,478.52 crore, as per provisional data available on NSE. FIIs have offloaded over Rs 26,000 crore in the cash market in December so far.
As Sensex trades in red due to concerns over rising Omicron cases, some big questions arise. Should the investors buy the dip?
Here’s what experts say:
Mr. Manoj Dalmia, Founder and Director, Proficient Equities Limited
Major Indian Indices like Sensex and Nifty have entered a correction mode, down 10 per cent from their all-time highs. Rising inflation, reduction in interest rates globally, selling by FII’s and Omicron’s threat are the major reasons behind the crash.
We may expect some further selling in the coming days, as this seems to be a short correction, buying may pickup when valuations seem reasonable. Sensex might correct till 52000-53000 range which is a support area.
Sonam Srivastava, Founder at Wright Research
The market that has had global liquidity as its main driving factor is melting now after the announcement by the US Federal Reserve that they would be reducing the liquidity in an accelerated way as the inflation in the US is not transitory. So, it is not just India, but markets worldwide opened deeply red. The accelerated depreciation of the Indian Rupee also confirms this theory.
This situation is similar to the volatility we saw in 2012-13 when the Fed had started QE tapering, which came along with deep correction in the INR. However, India’s economic condition is far more positive, with deficits in check and inflation within control.
Moreover, the growth projections in the various areas of the economy are also very robust. Therefore, I think we should see this correction as short-term pain as the markets adjust to the Fed announcement and expect the attention to India, which is now in the undervalued territory, to come pack once things stabilize.
Divam Sharma, Founder at Green Portfolio
This selling is across the broader markets as there is uncertainty regarding the Omnicron spread, liquidity from FII’s has moved significantly over the last few days and there is not much room for federal banks to hold interest rates with inflation reaching the roof.
This is also coupled with the year-end approaching and most of the employees in these large institutions going on year-end leaves wanting to lighten their portfolio. This phenomenon is across the EMs (Emerging Markets) and DMs (Developed Markets).
Investors should continue to stay disciplined with their equity investments as this is a natural course that the market goes through in various periods. This market fall should be used as an opportunity to gradually accumulate the companies which will be winners in the long run, keep a long-term focus, and ensure that they do SIPs in days like today.
India’s story looks attractive with the developments we have seen across PLI, Infra spends, China plus one, etc. and huge wealth creation will be offered by Indian markets over this decade.
V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services
The negative factors persist, causing concerns about further downtrends in the market, particularly if FIIs continue to sell. But negative sentiments are unlikely to last long. Omicron variant, though fast-spreading, has not proved to be as highly virulent as feared. Also, FIIs will turn buyers soon when valuations become attractive.