InvestorQ : How do you see the stock markets on 25 March after the really sharp correction on Wednesday?
Niti Shenoi made post

How do you see the stock markets on 25 March after the really sharp correction on Wednesday?

diksha shah answered.
1 year ago

On Wednesday, 24 March, the stocks fell to a 1-month low and the Sensex lost 871 points in a single day as the fears of a virus resurgence took its toll on stock markets. Unlike the previous three days, Wednesday was a day when we got to see all round selling in the market with metal stocks being the worst hit as trade again came into question.

Even as concerns there were rising restrictions in Europe and in many parts of India, there were other practical concerns too. The VIX shot up sharply by 9% to 22.5 and the advance / decline ratio or the A/D ratio fell dramatically to 12:38 clearly indicating that the sellers in the market were once again in control. Clearly, sentiments appear to have been dented.

FPI flows were once again negative on Wednesday with net selling to the tune of Rs.1952 crore even as domestic institutions bough Rs.613 crore of equities. But that was little compensation for the aggressive selling from the FPIs. There suddenly seems to be a risk-off sentiment globally as investors are once again preferring safe havens.

The Dow Jones Industrial Average or DJIA closed almost flat but lost nearly 300 points from the peak even as NASDAQ ended Wednesday over 2% lower. Despite being the hub of COVID resurgence, European markets were generally happy with the strong dollar. F&O expiry is likely to be the big even on Thursday, being the last expiry of fiscal 2021.

One thing is clear that the short term sentiments appear to have been dented. Whether this turns into a medium term correction is something we need to see and that will determine the future strategy. Ideally, if the resurgence in COVID tapers it would be a great boost for the markets. That is the hope, at least, for the time being.