Investors lose nearly Rs 10 lakh crore in 6 sessions as stock markets tumble; what’s next?

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Investor wealth dipped by nearly Rs 9.95 lakh crore in six trading session, as the equity market witnessed a huge fall due to a spike in bond yields amid weak global cues. The total market capitalisation of BSE listed companies declined to Rs 1,99,32,144.68 crore on March 19 (around 10 am) from Rs 2,09,26,653.46 crore on March 10.

Extending its fall for the sixth trading session, the Sensex lost 2,181 points, or 4.25%, to trade at 49,097.70 in the morning trade on Friday. The broader NSE Nifty sank 692 points, or 4.55% to 14,484 during the same period.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “Market dynamics have become highly complex with an uncertain cocktail of positive and negative factors. The smart rebound in economic activity, sharp decline in crude by 7% overnight, reaffirmation of accommodative monetary stance by the Fed and resumption of FII buying are clear positives. But the second wave of Covid, particularly in the economically crucial state of Maharashtra, the rise in US bond yield above 1.7% and sustained DII selling are negatives. The market direction in the short-term will be decided by either the positive or negative factors gaining traction, going forward. Investors will have to wait and watch.”

Gaurav Dua, SVP, Head-Capital Market Strategy, Sharekhan by BNP Paribas said, “The sentiments were affected adversely by the sudden firming up of the bond yields in the US along with another day of the surge in new COVID cases to 38,500 – the highest in past four months in India. The clubbing of IPOs in the already tight advance tax payment season also seems to have added the underperformance by Indian markets as compared to its Asian peers and European markets.”

Among the sectoral indices on BSE, the Realty index declined the most 6% since March 10. The BSE Bankex, Capital Goods, Oil & Gas, Healthcare and Auto indices slipped between 3%-5.90%. The BSE Midcap and Smallcap also lost more than 3%.

Going ahead, Dua of Sharekhan added that Nifty should find some support at swing low of March at around 14,400 level. However, a lot would depend upon heavyweight sectors like banking and IT services, which have come under pressure lately. “Our base case prognosis is sideways movement of benchmark indices with negative bias in the near term. Thankfully, the correction has brought down valuation to interesting levels in some of the pockets in the markets and this should bring buying interest back into equities sooner than later.”