Markets slip 1% amid broad based sell-off; what should investors do on Friday?

Indian benchmark equity indices closed nearly a percent lower on Thursday led by a sharp sell-off across the board following weak global cues. With fresh virus waves hitting Asian and European countries, global bankers seem unconvinced about a smooth economic recovery.

Sentiments also took a hit when Fitch Ratings decreased India’s GDP outlook for the current financial year (FY22) to 10% from 12.8% earlier, citing a sluggish recovery.

At close, the Sensex was 486 points or 0.9%, down at 52,568, while the Nifty50 was 152 points, or 0.96%, down at 15,727..

The broader markets, however, remained relatively resilient to the fall as the mid and small-caps, though in red, outperformed the benchmarks.  BSE Midcap and Smallcap indices fell 0.37% and 0.09% down, respectively.

Sectorally, all but the IT index closed in the red with the Nifty Metal and PSU Bank indices leading the list of losers.

Tata Motors, JSW Steel, Bajaj Auto, Hindalco Industries and ONGC were the top losers on the Nifty. Top gainers included names like Tech Mahindra, SBI Life Insurance, Eicher Motors, IndusInd Bank and Shree Cements.

India VIX spiked 11% to rise above the 14 level, suggesting caution among traders.

IT major TCS reported its June quarter numbers which were slightly below the expectations of the market. The company reported a consolidated profit of Rs 9,008 crore for  Q1, registering a 2.6% sequential decline due to lower other income, and missing analysts’ expectations. The revenue from operations grew by 3.9% sequentially to Rs 45,411 crore.

Here’s how experts see markets trading on Friday

Shrikant Chouhan, EVP, Equity Technical Research at Kotak Securities

Technically, on intraday charts the index has formed lower top formation which indicates further weakness from the current level. For the next few trading sessions, 15780 could act as important resistance levels for the traders and below the same, correction wave could continue up to 15635-15600. On the other hand, the immediate hurdle would be 15780/ 52750, and trading above the same we can expect continuation of uptrend up to 15830-15860 levels.

Ajit Mishra, VP – Research, Religare Broking:

Markets would first react to TCS numbers in early trade on Friday and that might set the tone for the result of the session as well. Further, demand scenario and management commentary will be crucial factors to watch in Q1FY22 results. We suggest keeping a check on naked leveraged positions and wait for clarity. Investors, on the other hand, should not read much into the intermediate correction and continue with the “buy on dips” approach in fundamentally sound counters with a long term view.