Market remains in the red; what should investors do?

Investors continued offloading Indian equities as the market benchmarks the Sensex and the Nifty ended in the red for the second consecutive session on March 3.

Sensex opened in the green but soon fell prey to profit booking and traded in the red in the second half of the session. Eventually, the index closed 366 points, or 0.66 percent, lower at 55,102.68. Nifty ended the day at 16,498.05, down 108 points, or 0.65 percent.

Power Grid, Wipro, Tech Mahindra, HCL Tech, ITC and Tata Steel ended as the top gainers in the Sensex index. On the flip side, Ultratech Cement, Asian Paints, Dr Reddy's Labs, Maruti and Hindustan Unilever ended as the top laggards in the Sensex kitty of stocks.

BSE Midcap index closed 0.64 percent lower but smallcaps witnessed buying interest. The BSE Smallcap index rose 0.35 percent.

"The subdued trend of the domestic market continued however the level of volatility is reducing. The release of strategic reserves of oil in India and abroad along with increased output from OPEC is expected to ease crude prices in the future," Vinod Nair, Head of Research at Geojit Financial Services, observed.

What should investors do?

The market will continue to remain on a volatile path as long as the Russia-Ukraine war continues. Besides, investors now await signals on rate hikes from major central banks of the world.

"The Indian market will look at the state election exit poll data while the global market on war developments, BoE, and Fed policy meeting status from next week," Nair said.

Analysts advise a cautious approach and prefer large cap stocks in the near term.

"Markets are punishing sectors and stocks which are heavily dependent on oil while metal and select energy stocks are playing savior. We are seeing a kind of balancing act in the index however negativity in the banking space may result in a fresh fall ahead. We reiterate our cautious stance and suggest preferring a hedged approach," said Ajit Mishra, VP - Research, Religare Broking.

As per Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities, the momentum support level for Nifty is seen at 16,350 for the March series while resistance is placed at 16,800-17,000 levels.

"We suggest maintaining long positions as long as momentum support level is held. Bank Nifty is expected to underperform in the near term until a strong reversal is seen. Prefer frontline stocks in the current scenario," said Agrawal.