What is your view for the stock markets on 22-December? Do you see the bounce in the Nifty and Sensex continuing?

After a series of weak trading days, the markets gained some ground on Tuesday supported by short covering and domestic buying. On 21 December, the Nifty gained 157 points and the Sensex gained nearly 500 points to break the falling trend. However, underlying weakness was evident in the way most stocks gave up gains in the second half of the day.

The advance decline ratio was largely favourable at 39:11 as was the India VIX which tapered lower to 17.5 levels on Tuesday. However, the pressure continued on the stock prices of Axis Bank and Bajaj Financials. Both the stocks came under pressure on the back of asset quality and margin concerns, especially in the light of the hawkish scenario.

Foreign investors were again net sellers in equities to the tune of Rs.1,210 crore while domestic funds and the Life Insurance Corporation bought stocks worth Rs.1,405 crore on Tuesday. In the last few weeks, the foreign portfolio investors have been net sellers in India in Indian but have been still investing into Asian EMs like Taiwan, Thailand and South Korea.

With most of the global markets robust on Tuesday, the opening for the market should be strong as is evidenced by the SGX Nifty. However, the area of concern could be the FII selling pressure, which has almost been unrelenting in the last few weeks. Also, the overhang of Fed hawkishness as well as rising inflation is still there.