Markets slip 1% amid high volatility. Here’s what should investors do on Wednesday

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Indian stock markets fell sharply in the last hour of trade with benchmark Sensex dropping 465 points, while the broader Nifty50 fell by 137 points on fresh worries over the impact of coronavirus on businesses as BCCI cancelled the ongoing IPL season. The increasing lockdowns added to the woes as Goldman Sachs lowered the India growth forecast.

After starting gap-up and staying range-bound for the better part of the day, the benchmarks gave up crucial psychological levels at close.

The BSE Sensex swung in a range of more than 800 points before ending the session at 48,253.51, weaker by 465.01 points or 0.95% and the NSE Nifty ended at 14,496.50, down 137.65 points or 0.94%.

The BSE Midcap and Smallcap indices also ended lower.

Except for the PSU Banks, all other sectoral indices ended in the red. The Nifty Pharma index was gripped in profit-booking and ended 2% lower on 4 May. All other sectoral indices on the NSE nursed losses between 0.4% and 0.8%.

Tata Consumer Products, Cipla, Dr Reddy’s Labs, Divis Labs and Reliance Industries were among the top losers on the Nifty. Gainers included SBI Life Insurance, ONGC, BPCL, Bajaj Finance and Adani Ports.

Here’s how experts see markets trading on Wednesday

Vinod Nair, Head of Research at Geojit Financial Services

Indian bourses opened with a strong grip but failed to hold onto their gains owing to weak international markets. As technology heavyweights continued to weigh on Wall Street equities, US futures slipped while European stocks struggled for direction. On the domestic market, gains in public sector banks were offset by weakness in pharma and auto stocks.

Ashis Biswas, Head of Technical Research at CapitalVia Global Research

Nagaraj Shetti, Technical Research Analyst, HDFC Securities 

After showing a fine upside recovery from the lows on Monday, Nifty witnessed a sharp sell on rises action on Tuesday and showed sharp weakness. After opening on an upside gap of 53 points, Nifty made an attempt to move up in the early part of the session. This is a negative indication and signals a lack of strength in the market to sustain highs or a sharp sell on rise is underway. This pattern could signal further weakness down to the immediate support of 14400 or lower in the short term.

A decisive move below 14,400 could pull Nifty down to a crucial lower support band of 14,200 -14,150 levels and that support area is expected to offer support for the market from the lower levels.

Nifty as per the weekly chart indicates that the market is struggling to sustain the highs, after a fine intra-week up move of last week.

The lack of strength to sustain the highs continued in the market and the fine upside bounce of the previous session has been negated. The market could slide down further and the next set of supports are seen around 14400 and the next 14200-14150 levels, where one may expect another round of upside bounce from the lows. On the way up 14,600-14,650 could act as a hurdle.