Subdued global cues led to muted trading in the Indian markets with alternate bouts of buying and selling for the first half of the trade. Thereafter the negative opening of the European markets triggered a sharp sell-off.

Volatility ruled the roost as bulls looked for cover near the penultimate hours of trade. Thereafter short covering at lower levels helped the markets to recoup partially.

Though all the sectoral indices ended lower, defensives such as FMCG and Healthcare displayed some resilience whereas Realty lost maximum ground. Select realty stocks such as HDIL, Indiabulls Real Estate and Unitech lost as much as 5.5 per cent each.

The Government’s hostile stand on fuel price hike cast a negative overhang over the oil marketing companies. As these counters now trade near the key support levels, markets participants would do well to keep a close watch for unexpected sharp moves.

Meanwhile, both the benchmarks (the Nifty and the Sensex) have closed below the key psychological and technical levels once again after several failed attempts to breakout on the upside.

Today’s sharp selloff may not induce fear amongst the market participants but it has done well to increase the apprehension over the comeback of the bulls. Thus it is now necessary for the markets to immediately bounce back from the current levels and close above the key crucial levels. In case the bulls fail to pull back and continue to trade below, a further downslide could be in the offing.

Increasing the apprehension is the lack of specific triggers at the time when domestic institutions have slowly turned net sellers. It’s time to be more vigilant than fearful.