Bears Paint the Stock Market Red Ahead of Christmas: Time for a Balanced Investment Approach

Mumbai, Dec 21 (NationPress) Indian benchmark indices plummeted by 5 per cent this week as a result of a global selloff, primarily instigated by the US Federal Reserve's cautious approach regarding rate reductions next year. This situation prompted continuous selling by foreign institutional investors (FIIs).

The Sensex saw a loss of more than 1,000 points in three out of five trading sessions this week, resulting in an erosion of nearly Rs 17 lakh crore in market capitalization for BSE-listed companies.

Market analysts noted that this week proved to be disastrous for equity markets, as major indices experienced significant declines, obliterating the gains achieved in the prior four weeks.

“The benchmark index encountered a notable drop, descending approximately 1,200 points from last week's closing value. Consequently, it ended the week beneath the 200 simple moving average (SMA), marking a cumulative loss of nearly 5 per cent,” stated Osho Krishnan from Angel One.

The Nifty50 also faced a substantial decline, crossing below all critical support levels. This downward trend has brought the index close to its most recent swing low, indicating possible market volatility.

From a technical perspective, as Nifty fell below the crucial zone of 200 SMA, the next potential support level is anticipated around the recent swing low of 23,200-23,100. A decisive breach could likely lead to further declines towards 22,800 in the near future, as mentioned by Krishnan.

The weak global indicators initiated this downward trend, but the subsequent sell-off reflects the bears' determination to paint the market red before Christmas.

On Friday, the Sensex closed at 78,041.59, down by 1,176.46 points or 1.49 per cent, while the Nifty finished at 23,587.50, down by 364.20 points or 1.52 per cent.

Additionally, the Nifty Bank concluded at 50,759.20, a decrease of 816.50 points or 1.58 per cent. The Nifty Midcap 100 index closed at 56,906.75 after dropping 1,649.50 points or 2.82 per cent.

Sector-wise, there was selling pressure in the Nifty's Auto, IT, Fin Services, Pharma, FMCG, Metal, Media, Energy, Private Bank, Infra, Commodities, and PSE sectors.

Given the recent developments, experts recommend approaching the markets with adequate risk management and avoiding complacent investments for the time being.

In this cautious environment, “we maintain an optimistic view on new-age, platform-based technology companies,” remarked Krishna Appala from Capitalmind Research.

A balanced investment strategy that merges the stability and reasonable valuations of large caps with tactical exposure to profitable, domestically-focused tech firms offers a sensible method for seizing growth potential while navigating geopolitical and policy risks, according to experts.