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The markets have fallen heavily since morning on the back of heavy selling across sectors. Currently the Nifty is down about 150 points and the Sensex is down nearly 400 points. So why are the markets seeing such a deep cut? To a major extent it is a reflection of the Asian trend which has not recovered since the Fed cut rates by 25 bps against the worldwide expectation of 50 bps.

According to technical analyst Ashwani Gujral, with a 100 points stop loss if someone goes long, the risk reward is pretty much in their favour. “This is because, at some point we would expect the global markets to bounce back and we have just come off new highs. So the market is just doing some backing and filling, and all this action is in the midcap. So it’s a good idea to be in spaces that are doing well in such a market like sugar, cement, pharma and FMCG types.

Commenting on what stance he has taken on the Nifty now, Gujral said that though the resilience remains, our markets can’t keep on making new highs while other markets correct. “This still remains a strong bull market, even the 200 DMA is quite far off so you would find support at lower levels,” Gujral said adding that once global markets stabilize we should make new highs probably next month. However, he advised that investors should be going long and this is not the time to panic unless the Nifty really goes below 5,750-5,800 levels.

So what strategy should investors adopt on the back of such falls? Gujral opines that this is a good point for investors to initiate a long as in a bull market the strategy has to be to remain long. “100 point here or there should not really matter,” he added. According to Gujral, with the Nifty reaching levels of 5750-5800, it has corrected sufficiently from previous highs. He added that once some stability is seen across global markets, a lot of buying will be seen in our markets too.

Meanwhile, CNBC-TV18’s analyst Anuj Singhal said that the extended Asian weakness is impacting sentiments. According to him, in a global environment, markets would have fallen in line with global markets and now that the Sensex and Nifty are both below crucial levels, some semblance of sense is prevailing in the markets.

Singhal said that a clear trend of delivery based selling is being seen in index heavies like Bharti, ONGC and Suzlon. He added that the lack of FII inflows is largely hurting largecaps stocks. Singhal said that the midcaps and smallcaps have continued their out performance but added that if the current fall trickles down to midcap stocks, it will then be time for investors to worry

Source: Moneycontrol.com