In what turned out to be a Black Monday for investors on Dalal Street amid global macro headwinds, Sensex crashed over 1,700 points today to hit an intraday low of 52,569.57. The domestic headline equity index is down over 5,400 points so far in the calendar year 2022.
While market gurus are divided over whether we are in the mid of a bear phase or a correction in a bull market that began in the aftermath of the Covid-led crash in March 2020, most experts believe that the weakness may continue ahead of the Fed meeting outcome on Wednesday.
If the US inflation hitting a 40-year high of 8.6 per cent last week wasn’t enough, China has started to re-impose Covid-19 restrictions once again which sent investors in Asia running for cover.
Ajay Srivastava, CEO, Dimensions Corporate Financial Services, said the sell-off was required as the Indian market continued to be overoptimistic in spite of all the global headwinds. “I think this is the first time we are seeing a very generalised selling. It is good for the market. Let the blood get out and let the weaker hands move out, and then only stronger hands will be left to hold on to equities,” he said.
Monday Mayhem! Key factors behind 1,500 points Sensex crash
Domestic stocks on Monday joined the global rout, sinking over 2 per cent, as data showed US inflation at fresh 40-year high in May at 8.6 per cent, weakening the narrative of ‘peaking inflation’ and opening up doors for aggressive Fed rate hikes ahead.
VK Vijayakumar of said that the near-term market trend is weak and such a scenario would be negative for risky assets like equity, particularly in the context of declining global growth. “The Indian market will stabilise only when the US market stabilises. Therefore, investors may wait and watch till clarity emerges,” he suggested.
Asutosh Mishra, Head of Research, Institutional Equity, Ashika Group, said the market correction can be utilized as a good opportunity for investors to rejig their portfolios. “Focus on how in the past these deep corrections may have given us the opportunity to position ourselves for profitable trade or investing. If we look around us we will find many businesses whose prospects look good in these difficult times. Use this time to invest in top companies from these sectors.”
Santosh Meena, Head of Research,
, said the fall is just a reality check as a majority of stock prices had moved far away from their fundamentals or intrinsic values.
Although he expects markets to be volatile in the near term, he advocates buying the dip strategy.
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One, says it has become a nightmare to trade stocks in the last couple of weeks. The pragmatic strategy, according to him, is to stay light on positions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
