InvestorQ : Should I be worried about the stock market after the crash on Monday? What is your view on the Nifty and Sensex for 22 December?
Niti Shenoi made post

Should I be worried about the stock market after the crash on Monday? What is your view on the Nifty and Sensex for 22 December?

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diksha shah answered.
6 months ago
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The correction on Monday the 21 December was quite sharp. In fact, at one point, the Sensex was over 2000 points down before finally closing around 1407 points lower. Tuesday will be crucial to see how much of the losses can be recouped.

The reasons for the fall were obvious. There were concerns of a second coming of COVID for some time and things almost got confirmed for the UK after countries started blocking their borders. India suspended flights to UK till 31 December raising concerns of COVID spread.

While the markets did take a knock overall, the correction was most pronounced in the counters where the build-up had been high. Specifically, companies like Tata Motors and IndusInd Bank with a strong UK connection were the stocks to correct most on 21 Dec.

Interestingly, there was no disconcerting selling by FPIs, who were net sellers to the tune of Rs.324 crore. DFIs bought Rs.486 crore on Monday. Although we saw rare FPI selling on Monday, the pressure was more in F&O than in cash markets.

Markets in FTSE, DAX and CAC corrected more than 2.4% on BREXIT and UK virus concerns. However, the US markets gained ground and the SGX Nifty has been positively trading up nearly 125 bps in early trades on Tuesday.

It needs to be remembered that the VIX also shot up from 19 to 23.5 in a single day, which can be quite a risk-on signal for markets. On Tuesday, the extent of the bounce from lower levels and the tapering of the VIX will be important signals for the market.

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