It is mayhem across the Indian markets. In three trading sessions on Wednesday, Thursday and Friday, the Sensex lost as much as 6.3 per cent.

Seldom does this happen, that too in a span of just three days. Heavyweights like Infosys, TCS and HDFC Bank saw some selling pressure on Wednesday, but managed to hold ground on Thursday and Friday.

If they start cracking, there is no telling where the index could be headed.

Nifty erases all gains made since start of the year

The Nifty has now given-up all of the gains that it made in 2018 and is in fact 2 per cent lower since the start of the year.

The Sensex had scaled to a new record peak of 38,989 points on Aug 29. Barely 40 days later, we are down a whopping 12 per cent in a very short span of time.

On Monday, most likely we will see a further down tick in the markets as US bond yields have surged all over again. The S&P 500 also posted its worst week in a month. However, what would be key is the rupee movement against the dollar. If the currency falls, we could see a further downside in the market.

Another worry for the markets would be the data that would emerge from the Association of Mutual Funds in India. If it shows that money into equity mutual funds is slowing, that would not be good news for investors. In fact, it could fall given the carnage in the markets.

Another important cue would be the movement of crude oil. Some analysts believe that crude could be headed to the dollar 90 per barrel mark, as sanctions kick-in from the US. Should that happen we might see further pressure on the markets, which have cracked this week, due to selling pressure in ONGC, HPCL, BPCL and Indian oil.

Banking stocks may hold steady

We saw good resilience in the markets from banking stocks. In fact, stocks like Punjab National Bank have been remarkably strong in a falling market. The bank is expected to see a turnaround this year and be back in the black. This maybe a good stock to buy on dips.

It would be interesting to see what happens to the market this week. It is going to be extremely volatile for sure. The currency movement would play a key. It is best to stay away until stability emerges and sit on cash ahead of key state elections.