InvestorQ : How do you see the stock market trading on Tuesday 21st September? Will the correction continue?
Lavanya Subramanian made post

How do you see the stock market trading on Tuesday 21st September? Will the correction continue?

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diksha shah answered.
2 months ago
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It did look like a sort of Black Monday on 20th September as Nifty fell 188 points and Sensex cracked 525 points. The pressure continued on the metal stocks with Tata Steel losing as much as 9% for second day in a row. Almost all the indices were down with the VIX sharply spiking to 17.49 on Monday. This is the number to watch out for as it shows risk.

There were a number of triggers for the fall. Firstly, the FOMC 2-day meet begins on 21st September and by Wednesday late night we will have a clear picture on the tapering. Secondly, there is rising concern over the likely implosion of China based Evergrande, with much larger implications for commodity demand as well as exchange rates if yuan weakens.

The FPIs were largely neutral on Monday with Rs.93 crore of buying but the concern is the rapid selling by DFIs, that were supporting markets till date. In global markets, Dow and NASDAQ were down over 2.4% on Monday, FTSE fell 90 bps while CAC and DAX were down 200 bps. Ironically, the SGX Nifty is trading about 30 bps higher in early trades.

While the Nifty may open in the positive, it remains a question mark if the gains can sustain. The key metrics to watch will be the VIX and the only way the Nifty can gain on Tuesday and sustain gains is if the VIX fall sharply. Also the Dow Futures and Asian market cues will hold importance on Tuesday. It will be a trading day largely driven by global cues.

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