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Business News/ Markets / Stock Markets/  Should you buy on dips in this current market?

Should you buy on dips in this current market?

Sensex is down over 2,000 points in just four sessions

Indian stock market indices Sensex and Nifty fell around 2% todayPremium
Indian stock market indices Sensex and Nifty fell around 2% today

Indian stock markets fell sharply today, dragged down by strong selling pressure in market heavyweights Infosys and HDFC Bank. After a gap-down opening amid weak global cues, the benchmark continued to trade with negative bias throughout the day. The NSE Nifty 50 index fell 1.89% to 17,142. The BSE Sensex slid 1,170 points to 57,089, extending losses to 2,200 points in four sessions. Midcap and Smallcap too ended lower by 1.1% and 1.3%, respectively. 

Infosys was the top loser in the Sensex pack, plummeting 7.27%, after the country's second-largest software services company March earnings missed market estimates.

HDFC Bank lost 4.74% despite reporting a 23% jump in Q4 standalone net profit, led by lower provisions, even as other metrics like net interest income came in below expectations.

“A number of factors which have unsettled investor’s confidence are: Global headwinds of likely aggressive rate hikes, rising inflation, and resurgence in Covid-19 cases in parts of the world and ongoing Russia-Ukraine conflict," said Naveen Kulkarni, Chief Investment Officer, Axis Securities.

“We expect FY23 to witness continued volatility in equity markets, especially in the first half of the year with rising interest rates globally and high inflation, which is expected to persist. In this scenario, we expect money to move from long-duration debt funds to equity funds in the second half of the year, which should bode well for equities."

Major global markets are closed today on account of Easter holiday.  However, sentiments remained soured due to jump in 10-year US Treasury yield and dollar index. Rising inflation also weighed on the market sentiments on elevated expectation of rate hike by US Fed. Crude oil prices too surged in last one week with EU considering a potential curb on Russian oil imports.

India VIX is up nearly 9% which is giving some discomfort to the bulls and needs to sustain at lower level for market stability, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

Technical Outlook

Technically, says Santosh Meena, Head of Research, Swastika Investmart, the Nifty ended with a Doji formation at a crucial juncture of 200 and 100-DMA which coincides with a 38.2% retracement of the previous rally. “Therefore it will be important to see whether bulls manage to show confidence or not. If Nifty manages to bounce back from here then we can expect a pullback towards 20-DMA of 17500 while if it fails to hold its 200-DMA then 17000-16900 is the next important support zone."

Bank Nifty, he added, is also sitting at an important juncture of 36700 because most of the important moving averages coincide with this area. “If it manages to bounce back from here then 37500 will be an immediate hurdle while 36000 will be the next support level."

Deepak Jasani, Head of Retail Research, HDFC Securities, said: “Volumes on the NSE were higher than recent average. Nifty fell once again with a downgap. On a three week basis, the Nifty has formed a bearish island reversal. It has however formed a doji after a fall on daily charts suggesting possibility of a temporary halt in the downfall. 17003-17387 could be the band for the Nifty over the next few days."

Nifty is now placed at the important valuation support of around 17000-16800 levels, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. 

“This area was acted as a significant reversal in the past and resulted in a substantial moves in Nifty on either side. Hence, there is a more scope for short term upside bounce. The overall chart pattern indicate a possibility of upside bounce in the market from here or from near 17K mark. The confirmation of reversal pattern and the strength of upside bounce is likely to open a relief rally for the market," he added. 


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Published: 18 Apr 2022, 05:44 PM IST
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