Do you see the stock market correction continuing on Tuesday after the sharp fall for 2 days in succession? Do you see a bounce on 26th April?

It has surely been two tough days for the market. On Monday, the Nifty lost another 218 points depleting nearly 440 points from the Nifty in just 2 days. Market capitalization of over Rs.6.5 trillion was wiped out from the investor wealth. The pressure was visible across the board with all sectors other than financials coming under pressure on Fed worries.

In terms of the structure of the market, Monday saw the breadth of Nifty again negative at 8:42 advance / decline ratio. In addition, the volatility index or the VIX spiked by more than 15% to 21.26 levels. The quarterly results and Fed stance are sources of stress in markets with the latest concern over a likely slowdown due to China COVID restrictions.

FPIs net sold Rs.3,303 crore taking their selling in last 2 weeks to Rs.23,000 crore. However, domestic funds bought stocks worth Rs.1,871 crore on Monday. There was a rebound in US markets on Monday with the Dow up 238 points and NASDAQ up 166 points. European markets were sharply lower by 2% while the SGX Nifty traded up by 73 bps in early trades.

With the heavy selling in the last two days, a retaliatory bounce or even a dead cat bounce is very much on the cards. However, it would be tough for the bounce to sustain in the current global stress. The Fed meeting on 04th May holds the key and China lockdown stress will keep the market on tenterhooks. Q4 numbers are also showing lot of input stress.