Bloodbath on Dalal Street: The Road Ahead
In the early hours of trading on Monday, Nifty plunged 10% to hit the lower circuit and trading was halted for 45 minutes. SEBI’s restrictions in the cash market and the F&O segment did little to help the market volatility.
Sensex was down 3934.72 pts to end at 25981.24 pts, the biggest single day decline. Nifty50 was down 1135.20 pts to reach 7610.25 pts. The value of INR against the US$ also fell to ₹76.19.
Indian investors so far have shown maturity as we see the Mutual Funds especially the SIP investments not going steeply down. However, panic still prevails and hence, the markets are highly volatile.
With US stocks and European stocks also trading low and the coronavirus cases still rising in India, it is quite possible that there may still be further downfall.
It is clear that the markets are not going to settle till Covid-19 comes under control and the businesses start operating once again.
On the other hand, the fundamentals (especially the PE ratios) of a lot of companies look attractive. The 14-days RSI shows entry points for a lot of stocks. It may be a good time to go long for a long-term. However, one cannot anticipate what will the S&R be at the moment with certainty.
Watchlist for Tuesday based on the 14-days RSI:
1. Bajaj auto
2. Eicher motors
3. Kotak Bank
8. Castrol India
10. JSW Steel
11. Adani Ports
12. Apollo hospital
It is sure that once the Coronavirus pandemic comes under control, markets will revive as we have seen in the past. Hence, investors may either bank on this unique opportunity by buying and holding the position for long-term or simply wait and watch till market stabilises.