How do you see the markets on Monday 25th April and do you see the correction of Friday continuing?

On Friday, the Nifty gave up another 220 points and the Sensex fell by over 600 points after a brief hope of recovery on Thursday could not be sustained in the markets. For the week as a whole, the Nifty lost 2%. However, the damage to the mid-cap Nifty and the small cap Nifty was much bigger, as traders kept liquidity aside for the forthcoming LIC IPO.

In terms of the market structure, Friday saw the breadth of Nifty largely unfavourable with advance / decline ratio at 8:42. The volatility index, represented by the VIX closed slightly higher at 18.35 levels. In terms of quarterly numbers, in the week, Nestle showed margin pressure while ICICI Bank showed good profits on lower provisioning in Q4.

Foreign investors net sold equities worth Rs.2,462 crore as domestic funds and LIC marginally bought stocks worth Rs.1,602 crore on Friday. FPIs have sold Rs.20,000 crore in equities in last 2 weeks. In global markets, Dow crashed 981 points, NASDAQ fell 336 points and European markets were lower by 2%. SGX is trading lower by 248 bps in early trades.

The Dow crash overhang, on the back of weak earnings and Fed hawkishness, would most likely rub off on Indian markets on Monday. It does look like a Black Monday based on early SGX Nifty signals and correction could deepen during the day. Traders will have to be cautious till early May when the Fed finally announces its May monetary stance.