Nifty crash worst single-day fall since Covid days. What should investors do?

The of all listed companies on BSE declined by Rs 45.56 lakh crore to Rs 380.35 lakh crore during the day.

had unleashed the bulls on Dalal Street on Monday with predictions that the ruling may win over 350 seats in the elections. However, counting trends show that the NDA is leading in around 300 seats while the opposition has bagged more than 200 seats.

"The market, which had begun to price in a landslide victory for the NDA, is witnessing a significant correction due to margin calls, as retail were carrying heavily leveraged positions. Support seems to be very fragile. Immediate support is visible at the psychological level of 22,000, below which the index might fall further towards 21,400-21,500," said Rupak De, Senior Technical Analyst, .

Buy the dip mantra may work as recovery looks possible once the trend moves in favor of the BJP winning the election comfortably. However, a bigger fall could be in the offing if NDA's seat tally fails to cross the 300-mark. A hung parliament could even kick off the beginning of a bear market before investors shift focus back to economic growth and earnings.

"If the election verdict is not to the market's liking, you will expect a meaningful correction in the near term. That is very simple. And when that happens, almost everything will fall. But if you think longer term of 2-5 years, banks should still do quite well," said top fund manager Prashant Jain.

Historical data shows that largecap forward-looking returns improve significantly over time.

"In the last 6 months, the average forward return (for Sensex) is 8.3% with a 73.2% winning chance. Over 1 year, returns increase to 15.8% with a 73.8% chance. At 2 years, returns jump to 30.7% with an 81.8% chance. By 3 years, the return is 44.2% with a 95.1% chance, and over 4 years, it reaches 55.9% with a 96.3% chance. This data highlights the benefits of patience and a long-term perspective in the market," said Quantace Research smallcase manager Karthick Jonagadla.

A large part of the selling is believed to be led by FIIs who have played cautiously ahead of the D-Day.

"Mutual funds are sitting on enough cash and that money should also get deployed. So, barring the today's reaction, I am not really worried about the market's trend changing at this point of time," said Ravi Dharamshi of ValueQuest Investment Advisors.

While long-term bulls are finding value in bluechips and other largecaps, the market may not be as kind to high flying small and midcaps.

"We expect 7-10% downside for broader markets from current levels. We recommend positioning to move from alpha stocks to defensives," Jaykrishna Gandhi of Emkay Global. He suggests adding FMCG, IT, pharma and shorting ABB, Siemens, Cummins, Coal India, NTPC, PFC, REC, PNB and Canara Bank.

Investor preference for defensive was clearly visible in the market as HUL, Dabur, Colgate-Palmolive and D-Mart rallied 4-6% each.

On the other hand, Nifty bluechips like Adani Ports, Adani Enterprises, SBI, ONGC, NTPC, Coal India, L&T and BPCL fell in double-digits.