Dalal Street Corner: Infosys, HDFC twins pull markets down; what should investors do on Tuesday?

Domestic markets witnessed selling pressure on Monday as BSE Sensex, Nifty50 ended in the red for the fourth straight session. Both the benchmark indices Sensex and Nifty50 closed around 2 and 1.7 per cent lower respectively. Even Nifty mid and small-cap fell over 1 per cent.

The markets were mainly dragged by Infosys and HDFC twins – HDFC and HDFC Bank, after reporting lower-than-estimated March-end quarter earnings earlier last week. Nifty IT fell over 4.5 per cent, followed by Nifty Bank and Financials each down around over 2 per cent.

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Of 50 scrips on Nifty, 25 advanced and 25 declined. NTPC surged most by over 6 per cent amid heavy volumes to become the top gainer, followed by SBI Life and HDFC Life each up around 2 per cent.

Tata Steel shares jumped around 1.5 per cent on the back of stock split news, and Maruti shares also closed nearly 1.5 per cent on the price hike announcement on Monday.

Sectorally, auto, FMCG, defense, fertilizers and Metal witnessed buying interest in an otherwise weak market, while IT, banking, financials, realty, pharma, and realty witnessed selling pressure on Monday. ed by HDFC twins.

We have collated views from different experts as to what investors should do when trading resumes:

Expert: Vinod Nair, Head of Research at Geojit Financial Services.

Unfavorable start to earnings season in heavyweight stocks of IT and banking sector led to heavy sell-off. The degree of downfall is high because the sector was trading at a high valuation and the risk of a downgrade in outlook has increased.

Lower-than-expected results prompted the market to worry about the headwinds faced by the IT sector like attrition, wage inflation, lower utilization, and cut in IT spending by industries due to geopolitical and macro issue.

Expert: S Ranganathan, Head of Research at LKP Securities

Indices opened a gap down on the back of weak global cues as the federal reserve tightens policies to tame inflation. Benchmark Indices never really recovered during the day from the twin blow of the IT Index and the Bank Nifty with rising oil prices and inflationary pressures adding to the woes.

The broader markets did see buying interest in select pockets like Defense, Paper & Fertilisers on the back of continued positive Tailwinds ”

Expert: Rahul Shah-Co-Head of Research at Equitymaster

As per data, Infosys along with the HDFC twins contributed 2 / 3rds to the overall market decline of nearly 1,200 points on the Sensex. While there are stock as well as sector-specific reasons for the poor performance of these counters, the broader outlook is not encouraging either.

A new threat of supply chain disruption has emerged following the rise in Covid cases in China. Add this to the already present challenges like inflation, geopolitics, and rate hikes and you’ll know why markets are behaving the way they are.

While no one knows whether this fall will worsen, it may be a good idea to be very selective in-stock selection and choose only the ones with strong fundamentals and reasonable valuations.

Expert: Ajit Mishra, VP – Research, Religare Broking Ltd.

After a gap-down opening amid weak global cues, the benchmark continues to trade with negative bias throughout the day. Also, lower than expected results from heavyweights like Infosys and HDFC Bank impacted sentiments.

We believe global cues as well as the outcome of Q4 earnings will continue to add volatility in the coming sessions. Hence, we would remain cautious on the markets and suggest traders to keep their position hedged.

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