Indian stocks saw intense selling pressure on Wednesday as benchmark indices Sensex and Nifty plunged over 2% each, triggering massive investor wealth erosion of nearly Rs 4 lakh crore in a single day.
The sharp market fall was led by banking stocks, especially HDFC Bank which alone saw market value decline of Rs 1.1 lakh crore. The Nifty Bank index registered its biggest one-day drop since February 2020.
Besides banks, metals and auto stocks also faced heavy profit booking while IT shares saw some buying interest. HDFC Bank, ICICI Bank, Axis Bank, Kotak Bank and Reliance contributed most to Nifty’s downside.
According to analyst Vishal Malkan, the correction was on expected lines as per historical trends in third week of January. He feels this could be start of a bigger correction than normal.
However, some experts advised using the dips to buy. “We expect a technical rebound in Nifty towards 22,000 if follow-up selling doesn’t happen. Use any dip as buying opportunity with stop loss of 21,450,” recommends ICICI Direct’s Dharmesh Shah.
The recent rally indeed was quite sharp, so some period of consolidation or minor price corrections cannot be ruled out.
For investors, it may be prudent not to panic by market volatility and focus on quality names that offer long-term wealth creation opportunities. Maintaining proper asset allocation and risk management strategies is also important.
The positive view is India’s economic and corporate earnings growth outlook remains strong compared to other countries amid global headwinds. This may cushion impact of external risks and intermittent volatility going ahead.
So while traders can aim to ride momentum, long-term investors could utilize major dips to accumulate quality stocks gradually from a 2-3 year horizon. Staying invested through ups and downs is key.
