How do you see the Nifty and Sensex outlook for 17 November after the sharp correction in the markets on Tuesday?

On Tuesday, the benchmark Nifty lost over 100 points but the fall from the peak of the day was much sharper. The Nifty closed just below the 18,000 mark on Tuesday, raising concerns about the resistance once again. The concerns were that the RBI may start a tightening policy from December itself which would reduce liquidity available in the market.

The advance decline ratio or the A/D ratio was unfavourable at 13:37 on Tuesday with just about the auto stocks gaining sharply. Without the auto rally, the fall could have been much worse. Most of the auto stocks announced a slew of price hikes across the board. On Tuesday, Reliance put pressure on the markets overall with metals under pressure.

Foreign investors net sold Rs.561 crore of equities on Tuesday while domestic funds bought Rs.577 crore worth of stocks. FPIs are wary of higher inflation triggering RBI tightness. On Tuesday, NASDAQ was 75 bps higher while the Dow was almost flat. Europe had a mixed day with FTSE in the red. In early trades, the SGX Nifty is 40 bps lower.

The outlook will remain under pressure for Wednesday with the higher inflation and the possibility of the RBI also tightening policy creating an overhang on the markets. However, low levels of VIX are a sort of consolation for the markets and could limit downsides from the current levels.