Last week, despite Indian cricketer Rishav Pant’s strong performance, bears on Dalal Street had much to celebrate as the sell-off in domestic equities saw 120 stocks from the BSE 500 index record double-digit losses.
Investors had hoped for a positive performance, but the resurgence of pandemic worries, especially with China’s sharp rise in COVID cases, caused a risk-averse sentiment that resulted in the Sensex and Nifty 50 registering their worst weekly losses in a year.
Friday was a tumultuous day for Indian stocks, as the Nifty 50, Sensex, and BSE 500 all closed sharply in the red. Despite this, investors remained resilient in the face of market volatility. 25 stocks hit new 52-week lows, including names from the public sector banking and Adani Group. Adani Wilmar in particular, lost 22% of its value, erasing nearly half of its gains since listing.
Last week saw a sharp downturn in the markets due to the outbreak of COVID cases in China and the safety guidelines issued by the Government of India to prevent a fourth wave of the virus. Easy Trip Planners suffered the most, with a drop of 18%, while analysts remain skeptical and advise trading cautiously. The short-term trend for markets has now turned negative, so investors should proceed with caution. Jay Bala, Chief Technician of CashTheChaos.com, believes that the recent market high is still part of a correction that began in October 2021 and will likely only conclude below the June lows. According to Bala, markets are driven more by perception than by fundamentals, making it difficult for some to accept and understand. He believes this will continue to be the case for the foreseeable future.