The Nifty fell for six straight days and five of them were this week. Sentiments have turned slightly bearish since RBI held interest rates steady.
Next week it's all about the Delhi elections. Analysts say that an AAP victory would mean a setback for the Narendra Modi led government and this could sour market sentiments.
"We think the market is likely to see a correction of around 5 per cent over next 2 months on account of supply of paper, rich valuations and weak earnings. A loss in Delhi polls for the BJP could further provide an excuse for the correction," said Bank of America Merrill Lynch's Jyotivardhan Jaipuria in a report in early Feb.
Many analysts interviewed by leading publications this week have highlighted the same. "It's the worst nightmare if a government with a socialist agenda comes to power in the capital," market analyst Hemindra Hazari was reported to have told NDTV.
The worry is that AAP is considered an anti corporate party and its tirade against corporates in the last couple of years has always been worrisome for the markets.
A simple majority for AAP may see at least a 100 point fall in the Nifty. Analysts would closely be tracking exit poll outcomes on Saturday itself and markets may react accordingly on Monday morning, before the result counting for Delhi on Tuesday.
Apart from the AAP the results season apart from the software companies has been a complete disaster. Tata Motors, Tata Steel, Punjab National Bank, Bank of Baroda, IOB and ICICI bank have all been major disappointments this earnings season.
It's clearly going to be a volatile session for the markets next week ahead of the Union Budget later this month. Brace for some heavy volatility and do trade if you are willing to bear losses as well.