This week, the local markets ended on a downbeat note. Many investors were quick to sell off their shares after any gains, following a common trend of selling on good news. Even though the company results for the third quarter met expectations, the market still dipped.
Several things contributed to this market drop, like cuts in spending by the Federal Reserve, slower earnings growth, high stock prices, and uncertainty in trade. Only four small companies managed to earn double-digit gains this week. The biggest winner was MPS, which shot up by 24%, followed by Fairchem Organics at 17%, Capri Global at 12%, and Zensar Technologies at 10.7%. On the flip side, 81 small companies experienced big losses. The biggest losers included Newgen Software, Cyient, and The India Cements.
In the midcap segment, no stocks saw gains in double digits, but Go Digit, Coforge, Mphasis, Persistent Systems, Laurus Labs, and United Breweries saw increases of up to 8%. Among the larger companies in the Sensex group, Kotak Bank led the pack with a 7% gain, closely followed by Ultratech at 7% and Tech Mahindra at 3.8%.
What should investors do next? Bigger upcoming events, like the Federal Open Market Committee meeting and the Union Budget announcement, will likely shape market feelings. While expectations for the Union Budget are low, if it concludes without any negative surprises, it could help ease worries in the market.
Analysts believe that uncertainty around Trump’s economic policies and high stock prices may affect the market short-term, especially in emerging markets. Vinod Nair from Geojit Financial Services thinks the market is now going through its last stage of adjusting. With the market down about 14%, it seems the worst may be over, supported by strong economic fundamentals. If company earnings grow at the usual 15% by FY26, we could see the market recover.
For long-term investors, now might be a good time to be patient and gradually buy more stocks, according to Nair. From a technical perspective, the market didn’t bounce back significantly after forming a Doji pattern last week, and it closed down by 0.5%. Nifty’s near-term outlook is weak, and if it drops below 22,975, it may go down to 22,800. Any rise towards 23,350-23,400 could be a chance to sell, according to Nagaraj Shetti from HDFC Securities.
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