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NSE India VIX soars over 17% as bears tighten grip; experts suggest IT havens

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Amid a weak trend in global markets and persistent foreign fund outflows and heavyweights like Reliance and Bajaj Finance tracking losses, Sensex is down over 3,000 points from its most recent high of more than 62,000. Are we seeing much-awaited market correction? Expert decodes; NSE's India VIX soars 14%

NSE India VIX soars over 17% as bears tighten grip; experts suggest IT havens
Volatility gauge India VIX index surged 17.9 percent to end at 17.5, its biggest single-day surge since February 26, as benchmark indices plunged sharply on Monday on profit-booking amid weak global cues as lockdown fears in Europe, Australia and elsewhere loomed.
At 2.38 pm, the 30-scrip Sensex was down over 2.5 percent or 1501.41 points at 58,134.60, and the Nifty50 index was trading 2.5 percent or 447.05 points lower at 17,319.50.
The market has been excessively valued for some time now and at high valuations, markets are vulnerable to sharp corrections, said Dr. VK Vijaykumar, Chief Investment Strategist at Geojit Financial Services.
Amid a weak trend in global markets and persistent foreign fund outflows and heavyweights like Reliance and Bajaj Finance tracking losses, Sensex is down over 3,000 points from its most recent high of more than 62,000.
“The trigger for the correction has come from multiple sources- warning by RBI, downgrading of India by foreign brokerages on excessive valuations, sustained selling by FIIs and perhaps more importantly by the fresh COVID-19 waves in parts of Europe and lockdowns in countries like Austria,” Vijaykumar told CNBCTV18.com.
Rahul Shah, Co-Head of Research at Equitymaster, on the other hand, said high growth expectations have been built into the stock market valuations for quite some time now.
"And if these expectations don't materialise soon enough, we may see further downward pressure on prices. From a valuations perspective, the broader market is already quite expensive. The only thing holding it up was hopes of a quick recovery in corporate earnings. Any delay there or any bad news on that front and there could be more downside in the offing," he said.
According to him, if an investor's time horizon is ten years, then he or she doesn't have to worry a great deal as long term India story is intact. But if it is 2-3 years, then it may be a good idea to either partially or fully exit most profitable investments and take some money off the table, Shah added.
Bajaj Finance, Bajaj Finserv, Reliance, NTPC, and SBI were among the top losers on the Sensex pack. Tata Motors and ONGC joined Bajaj Finance, Bajaj Finserv and Reliance as laggards in the Nifty50 group.
The broader markets too traded in red except for India VIX, which was above 17. The BSE Midcap was trading over 530 points lower or 2.06 percent down at 25,383.75 in afternoon trade. Nifty Midcap100 slid 2.49 percent or 778.90 points to 30492.50.
Moreover, on a day when the stocks of new-age companies like Zomato and PB Fintech, which operates Policybazaar.com, have dipped more than 10 percent, Vijaykumar said, “The disastrous listing of Paytm has dented the euphoria and market sentiments have taken a knock.”
After crashing over 27 percent at close on the listing day last week, Paytm shares further plunged 19 percent on Monday in a highly volatile session.
Dr Vijaykumar advised that investors should wait for the dust to settle. “Sharp corrections can be used to buy IT stocks which are the clear leaders of this rally,” he added.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
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