Tensions in the middle east and FII outflows hit Indian markets hard as indices corrected over 4% during the week. The decline was broad-based with sectors like auto, banks, infra, and energy witnessing heavy selling pressure.The bearish sentiments in the market resulted in the sharp fall of smallcap stocks as only 14 stocks delivered double-digit returns the week.No smallcap has offered returns over 20% with the highest return being 19.8% by Hercules Hoists. It is closely followed by Anup Engineering at 19.65% and ITD Cementation at 18.9%.Meanwhile, over 700 stocks in the smallcap segment slipped into red with 11 of them correcting in double-digits. Kamdhenu Ventures, Opitemus Infracom, Sterling and Wilson were the top losers up to 41% in the week.In the midcap segment, there were no stocks which gained in double-digits. Whirlpool, Petronet LNG, Bayer CropScience and a few others bucked the trend and rose over 5%Among the Sensex pack, only four stocks including JSW Steel, Infosys, Tech Mahindra and Tata Steel ended in green.During the week, Indian Markets underperformed most global markets. The upbeat Chinese market sentiments, which led to a 22% rally, caused a major outflow of FII money.The last three days witnessed huge FII selling of Rs 30,614 crore in the cash market. FIIs are moving money from India to cheap Hong Kong on expectations that the monetary, and fiscal stimulus being implemented by the Chinese authorities will stimulate the economy and improve the earnings of companies.What should investors do?Analysts say the market is likely to witness a consolidation phase as the expensive valuation and unfavourable macro situation may influence investors to adopt a sell-on-rally strategy."The pessimism on the market is expected to continue in the near term amidst rising crude prices and fund flows to cheaper markets like China," said Vinod Nair, Head of Research, Geojit Financial Services."While there may be a pause or slight rebound after the recent slide, the overall bias will remain negative unless Nifty decisively reclaims the 25,600 level. Key sectors such as IT, metal, and pharma are showing resilience, while others are facing selling pressure during rallies. Traders should adjust their positions accordingly and consider adopting a hedged approach," said Ajit Mishra – SVP, Research, Religare Broking.Technically, the near-term uptrend of Nifty has turned down sharply."A decisive move below 25,000-24,950 levels could open the next downside of 24500 in the near term. Immediate resistance to be watched around 25,300," said Nagaraj Shetti of HDFC Securities.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)