What is your market view for Thursday the 17-February and do you see the sell-off continuing?

It was all about Ukraine as after 2 days of massive gyrations in the market, the Nifty closed just about 30 points lower on Nifty. It may be recollected that after the carnage on Monday, the markets had bounced on Tuesday after Russia indicated it was withdrawing troops from Ukraine. However, that has not been followed up by Russia with any affirmative action.

In terms of structural market fundamentals, the advance decline ratio or the A/D ratio of the Nifty Index was unfavourable at 17:33 with visible losses in the automobiles and financial sector. The VIX or volatility index was virtually flat at 20.69 levels. Small caps were the outperformers in a tough market, even as most other classes underperformed.

FPIs sold equities worth Rs.1,891 crore while domestic funds and LIC bought stocks worth Rs.1,180 crore on 16-February. Fed minutes were still quite hawkish but kept an escape route and that would belikely reflected in the market on Thursday. Dow and NASDAQ as also Europe were lower on Wednesday. SGX Nifty is 35 bps up in early trades.

The market trajectory would still depend on the way the Ukraine situation evolves. The Fed minutes now seem to hint at 50 bps rate hike in March 2022 but future rates are likely to be only data driven and if inflation tapers then the Fed may even go slow. The big trigger for the Indian markets will be the timing and response to the LIC IPO.