Despite the uncertainty injected by US President Donald Trump, Asian stocks have rebounded with a vengeance on a technical pull-back. Analysts expect the market to remain volatile, but also projected that due to its oversold condition and the reasonable valuation of large-cap stocks post a sharp correction, the market would rebound on Tuesday. Marketmen will also closely monitor the financial results and outlook for India Inc, especially the IT and auto sectors, and the ongoing RBI monetary policy meet.
Meanwhile, Gift Nifty at 22,650 indicates a strong recovery for the domestic markets at open and a gain of nearly 400 points for Nifty.
Led by Japanese stocks, equities across the Asia-Pacific region are up between 1 and 6.5 per cent. Japan’s Nikkei topped 6 per cent amid reports of tariff negotiations and expectations that Trump may soften his stand on tariffs.
Nilesh Shah – MD, Kotak Mahindra AMC, said: “The market is unable to quantify the uncertainty unleashed by the tariff war. It is reacting to every news coming through. Likely that the unfolding events will keep sellers in an aggressive sell mode and buyers in a reluctant buy mode.”
It will be futile to predict future events, he said, adding that investors should follow their asset allocation dharma. Large Caps are fairly valued and hence deserve neutral allocation. Buy into corrections gradually as markets become cheap. Domestic themes including cement, building materials and consumer discretionary items look attractive from a longer-term point of view. The tax rebate announced in the Budget, the EMI burden reducing due to lower rates, a likely drop in oil prices and the Eighth Pay Commission to be implemented next year will support the consumption theme.”
Shiv Chanani, Senior Fund Manager – Equity, Baroda BNP Paribas Mutual Fund, said on Monday’s market fall: “The market fall is clearly the fallout of what is happening in the global markets. The current investor sentiment is characterised by uncertainty and, hence, fear. We expect the current uncertain environment to persist till the time the “new normal” for global trade is established. Calling out the top or bottom in the markets is always the most difficult thing to do. What one should focus on is the fundamentals, which is earnings trajectory and valuations. While the latter has come to reasonable levels on a broader basis, earnings growth trajectory is clouded by the current uncertain environment.”
The strong counter-buying by domestic institutional investors will help the market arrest the sharp downside. However, derivatives data continues to reflect a strong bearish tilt, said analysts.
“Call writers have decisively outpaced put writers, reinforcing the negative undertone. The 22,500 strike witnessed substantial call writing (45.23 lakh contracts), cementing it as a key resistance. Meanwhile, significant put writing at the 22,000 strike (80.79 lakh contracts) suggests solid support at lower levels, though the defensive stance from buyers is beginning to weaken. The 22,300–22,500 range now acts as a strong supply belt, while the shifting put base toward lower strikes (22,000–22,100) indicates fading optimism. The Put-Call Ratio (PCR) dipped from 0.60 to 0.58, showcasing growing caution. With the Max Pain level resting at 22,750, bears appear to be absorbing every bullish attempt, increasing the likelihood of a further downward drift,” said Dhupesh Dhameja, Derivatives Research Analyst, SAMCO Securities.
Volatility Trends:
India VIX, the fear gauge, spiked dramatically by 65.70 per cent to 22.79, highlighting a surge in market anxiety. This sharp rise signals heightened uncertainty ahead of the RBI’s monetary policy meeting on April 9. Traders should brace for intense intraday volatility, unexpected whipsaws, and sharp price swings as policy risks and global headwinds add to the turbulence, he said.
Published on April 8, 2025
