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    What's next after Monday mayhem?

    Synopsis

    FII flows are expected to be moderate due to Christmas and New Year holidays.

    Stock-market---Bull---Bear-
    All components in the Sensex pack also ended in the red, with ONGC falling the most 9.15 per cent. IndusInd Bank, Mahindra & Mahindra, State Bank of India and NTPC too slipped over 5 per cent.
    NEW DELHI: Analysts on Dalal Street see room for a minimum of 5 per cent correction in the domestic equity market as a new strain of the coronavirus in the UK hit market sentiments globally. Earlier in the day, the benchmark BSE Sensex cracked nearly 1,407 points, or 3 per cent, to close at around 45,554. Likewise, the NSE Nifty slipped 432 points, or 3.14 per cent, to 13,328.

    All components in the Sensex pack also ended in the red, with ONGC falling the most 9.15 per cent. IndusInd Bank, Mahindra & Mahindra, State Bank of India and NTPC too slipped over 5 per cent.

    Going ahead, inflows by foreign institutional investors (FII) are expected to moderate due to Christmas as well as year-end holidays. Commenting on the further movement of the benchmark equity indices, Naveen Kulkarni, Chief Investment Officer, Axis Securities, said, “The macro set for India is still positive as economic activities are picking up and liquidity continues to be strong. However, the passage of stimulus in the US will provide downside protection to the equity markets. So, the markets could correct further by another 5 per cent, but that will provide opportunities to build a long term position in the market.”

    On the other hand, Jaideep Hansraj, MD and CEO, Kotak Securities, added that FII flows are expected to be moderate in the holiday season.

    Overseas investors have poured more than Rs 1 lakh crore in the domestic equity market since November amidst better-than-expected economic recovery around the world and positive sentiment on the back of various vaccine results.

    Technically, Nifty formed a large bearish candle which has engulfed the high-low range of the previous nine sessions. Overall, the advance-to-decline ratio on the NSE on December 21 was the worst since March 23, 2020, when the Covid fears were at peak. This suggests across the board panic selling or profit booking by market participants.

    Vinod Nair, Head of Research, Geojit Financial Services, said, “The vulnerability of the market was high due to quick gains made in the ongoing rally leading to low margin of safety. However, we do not expect a big correction rather a consolidation, in the short-term, of not more than 7 per cent to 10 per cent in the main indices. Buying at dips can be considered as a strategy in the falling market.”

    Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services, said, “The market may consolidate in near term till the concern over new strain subsides. Further, with the Christmas vacation starting, the FII liquidity could slow down, thus constraining the market. However, the overall structure of the market remains positive on the back of abundant liquidity and effective vaccine rollout. The market could also be volatile given the monthly F&O expiry this week.” Volatility gauge, or India VIX index, also spiked sharply by 24.53 per cent to 23.19.



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    (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2024 and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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