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Home >Markets >Stock Markets >'Stay cautious,' say analysts as Sensex, Nifty suffer biggest fall in 4 weeks

Indian stock markets fell the most in nearly four weeks as investors booked profits after indexes hitting multiple record highs this week. The Nifty and the S&P BSE Sensex each fell over 1% to close at 14,433.70 and 49,034.67, respectively. This was the first major correction since December 21st, when markets fell over 3%.

However, Nifty rose for a third straight week, while the Sensex gained for an eleventh straight week, each gaining about 0.5%.

US. President-elect Joe Biden on Thursday outlined a $1.9 trillion stimulus proposal, which analysts say was in line with market expectations. Banks, financial institutions and IT stocks were major laggards. The Nifty bank index was down 0.84%, while the IT sub-index fell 2.24%.

Among the Sensex stocks, Infosys and HDFC fell about 2% each. Bharti Airtel rose 3.8% after the MSCI Global Standard indexes said on Thursday it would review the weight of the stock in February.

Here is what analysts said on today's market performance:

Sneha Seth, derivatives analyst, Angel Broking

“We began the week on a cheerful note and saw follow-up buying to extend the up move beyond 14650 mark. Around this levels, we found some parameters like PCR-OI and FIIs ‘Long short Ratio’ hinting market in the overbought zone. As anticipated, we witnessed decent profit booking at the higher level which led weekly closing below 14450 mark. The volatility index surged more than 16% this week, which is certainly not good for bulls. We expect some follow-up selling in the coming week as well. Hence, traders are advised lightening up their longs and prefer buying slightly OTM puts incase of any pullback around 14500-14550. Stay cautious."

Deepak Jasani, Head of Retail Research, HDFC Securities

"Volumes on the NSE were higher than the previous session. Advance decline ratio was severely negative. The Nifty has given the first signs of reversing after a steep rise. Advance decline ratio has also raised concerns over the last few days of possibility of a formation of a short term top. 14563-14256 are the resistance/supports for the Nifty in the near term."

Vinod Nair, Head of Research at Geojit Financial services

"The $1.9 trillion ‘American Rescue Plan’ failed to uplift the sentiment of the western market. Investors can resort to profit booking as the near future trend of the market will depend on budget expectations, stock wise Q3 result and foreign inflows."

Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments

"The support of 14350 was threatened today but the markets bounced from there. Caution must be exercised at the current juncture as the breaking of 14350 could result in a precarious situation where the Nifty can go down to test 14000 almost instantaneously. On the upside, 14700 is the key resistance level to watch out for and unless we do not get past that, we will not resume this uptrend. We should get a clearer picture of Nifty's direction in the coming week." (With Agency Inputs)

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