Bearish Market Trend May Prevail Again Next Week

It was seven straight week of losses for the Sensex, with the index ending the week 7.5 per cent lower. The benchmark index ended the week lower at 27,590 points, with weakness persisting in banking stocks. Rising infections and deaths caused by the coronavirus continues to create panic in the markets.

The Bank Nifty declined 13.5 percent and saw its longest losing streak since 2008. Banking stocks are bearing the brunt of the lockdown, with investors fearing that it could lead to a sizeable increase in the non performing assets of banks. Some banks have warned of defaults from the SME sector.

The Nifty auto index too was down sharply by 8.5 per cent, its sixth straight week of losses. Markets have been extremely bearish over the last few weeks and the trend is unlikely to change.

Contributors to the Nifty losses	Percent loss contribution
ICICI Bank	39 points
HDFC	36
HDFC Bank	17
Axis Bank	17

No place to hide

There is actually no place to hide for investors. Earlier, IT stocks were rather resilient from any shocks, but, their business prospects too are likely to change. In fact, it is highly likely that IT companies would be the biggest ones to be impacted as clients might freeze budget spendings in the US.

The Pharma sector has been relatively better compared to most others, however, the industry constantly has the FDA sword hanging over it.

Overseas markets remain weak

Global markets from Asia to Europe were also weak. The S&P 500 dropped 2.1 per cent for the week, but, held onto the 18% rally in three days of the last week. Crude Oil surged, which helped the US markets to be relatively stable as compared to India. Most of the European and Asian markets ended the week lower, but, their losses were much less compared to the 7.5 per cent loss for the week, that Indian markets saw.

Markets may continue to dip

The bearish trend may continue to prevail in the markets for the next week as well. It looks like the entire month of April may see a slightly weakish trend, given the way infections have panned out in the US. In fact, rising infections and deaths are causing a great deal of pain in the markets. It's difficult in this market to advise any kind of buying. However, one may find comfort in select stocks from the pharma and FMCG space. Some FMCG stocks like HUL have already become too expensive and hence investors should look at stocks beyond HUL.