How do you see the outlook for stock markets on 24th Jan 2022 after the sharp correction in Nifty and Sensex last week?

During the previous week ended 21-Jan, the Sensex lost 2,272 points with heavyweights like Reliance, TCS and Infosys giving up close to Rs.1,85,000 crore between them The top 10 stocks lost nearly Rs.253,000 crore in market cap during the week. The undertone remained week due to the Fed meet on Wednesday, the rising inflation and upcoming budget.

Nifty closed Friday at 11,617 with an advance decline ratio of 15:35. This is strongly in favour of declines. The volatility index or the VIX trended sharply higher to 18.89 levels, although this is where it has repeatedly stabilized. Bajaj Auto, HUL and Hero Moto were among the major gainers while Bajaj Finserv fell after disappointing results.

FPIs sold Rs.3,149 crore in equities while domestic funds bought Rs.269 crore on Friday. FPIs overall sold Rs.12,600 crore in equities last week on pre-budget concerns. In global markets, the Dow lost 450 points and NASDAQ lost 385 points on macro concerns. Markets across Europe and Asia were in the red while SGX Nifty is lower 127 bps in early trades on Monday.

The week is likely to be very cautious. There are already expectations of a populist budget being built in with all the elections coming up. Then there is the all important Fed meet this week where the bet is on a much earlier rate hike. In the midst of this scenario, there is no respite on inflation as is evident from the input cost pressure in Q3 results.