Markets record biggest fall in nearly 3 months; what should investors do on Tuesday?

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The market started off the week on a negative note and fell sharply to close a percent lower on July 19, dragged by banking and financials, auto, metals, and select IT stocks.

The concerns that the spread of the Delta variant of coronavirus could dampen global economic recovery weighed on investor sentiment.

The BSE Sensex plunged 586.66 points or 1.10 percent to 52,553.40, while the Nifty50 declined 171 points or 1.07 percent to 15,752.40. The Nifty Bank declined 672.60 points or 1.88 percent to 35,079.20 . HDFC Bank dragged Nifty and Nifty Bank the most as it fell nearly 3.5%

Midcaps and smallcaps fared better than their larger peers. The BSE midcap index closed 0.58% lower, while the smallcap index fell 0.3%

The overall market-capitalisation of BSE-listed firms dropped to Rs 233.22 lakh crore making investors poorer by nearly Rs 1.3 lakh crore in a day.

Shares of Adani Group companies declined more than 2-5% each on Monday after the government informed the Parliament that the SEBI and customs authorities are investigating some Adani Group companies for non-compliance with rules.

Finance Minister Nirmala Sitharaman said in a written reply to Lok Sabha, “India’s strong fundamentals and market size will continue to attract market-seeking greenfield investments”

Going forward, markets are likely to react to the stock market movement in the US which ended with a fall on Monday.

Wall Street stocks tumbled on July 19, with Dow Jones losing more than 850 points by midday amid global concerns over spiralling inflation and resurgent COVID-19 waves. The broad-based S&P 500 fell 1.8 percent to 4,251.21, while the tech-rich Nasdaq Composite Index shed 1.4 percent to 14,225.30.

Here’s how experts see markets trading on Tuesday

Manish Shah, Founder, www.Niftytriggers.com

Nifty had a very volatile trading day as the index saw a rollercoaster ride. Nifty opened the day lower by 170 odd points.  The anticipated breakout seems to have failed as Nifty has turned back below the 15900-15950. What this means is that Nifty is back within the trading range of 15600-15900. Declines to 15600 is the support for Nifty. For Nifty traders this is a well established range. Investors can buy around 15600 and sell around 15950 or wait till there is a clean breakout in either direction.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities

The short term trend of Nifty seems to have turned down, after a display of lack of strength at the new highs. The overall chart pattern signals chances of the market sliding down to the crucial support of 15,635 levels in the short term. But, there is a higher possibility of Nifty moving below this support over the period of time. Any upmove from here could find selling pressure around 15,825 levels.

Ajit Mishra, VP – Research, Religare Broking

Markets started the week on a feeble note and lost over a percent, tracking unsupportive global cues. Besides, the subdued result of the banking heavyweight, HDFC Bank, was also weighing on the sentiment. We’re mirroring the global indices as the lingering fear of the third wave has been haunting markets now and then. Besides, participants are closely eyeing the earnings and reacting sharply to any disappointment. With this decline in the index, we may see further consolidation ahead. Meanwhile, we reiterate our view to continue with a stock-specific trading approach while keeping a check on leveraged positions.