Even as the global markets remained stable, heavy selling by foreign portfolio investors (FPIs) in the cash and derivative segments led to a sharp fall in Sensex and Nifty on Monday. For the third time in nearly a fortnight, the Nifty index tested the recent low of 14,250 but did not break.

Although investor sentiment is at its nadir, experts say that since Nifty’s third attempt to break the recent low decisively was unsuccessful on Monday, a reversal in trend could be in the offing if the index sustains at current levels.

On Monday, the Sensex fell 882 points, or 1.81 per cent, to close at 47,949. The Nifty index fell 258 points, or 1.77 per cent, to close at 14,359. The Bank Nifty index fell the most by 2.4 per cent, or 769 points, to close at 31,208. Provisional data showed that FPIs sold stocks worth ₹1,633 crore in the cash segment. In index derivatives, FPIs were net sellers of ₹310 crore. However, in the stock futures segment, they were net buyers of stocks worth ₹345 crore, giving hope.

‘Knee-jerk reaction’

“Bank Nifty may make a double bottom near 30,500 as it bounces back from being oversold like it was in September 2020. Nifty may make a triple bottom near 14,200, which is also 66 per cent backtracking of the post-Budget rally. All combined, the knee-jerk reaction of markets on Monday seems overdone. We should stabilise and trend higher again,” said Rohit Srivastava, chief strategist, Indiacharts.

Fourth quarter results could provide the next big trigger for the markets, analysts said.

“A 10 per cent correction from the Nifty peak of 15200 would be a good support level, that is, 13,600-13,700. However, now is the time to start stocking up as the downside is not likely to be as deep and long,” said Nimish Shah, Chief Investment Officer, Waterfield Advisors.

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