It was a very disappointing day for markets as things took a turn for the worse. The cuts deepened through the day and key technical levels got breached. A more than 100 points shave-off on the Sensex and more than 350 points gash on the Nifty resulted in the Nifty close below 4,850 and the Sensex slip below 16,500 levels today. The markets witnessed their biggest single-day fall since August 17.
Hawkish statements from the credit policy created nervousness in the interest rate sensitives. The real estate space got badgered today with Unitech and DLF down 7-8% post hiking of real estate provisions, while banks went home with biggest loses with State Bank of India and ICICI Bank down 4-6% post the tightening of non-performing asset norms.
Is the correction in markets over?
Dipan Mehta, Member, BSE, sees markets correction for a few more trading sessions. "The result season has been hanging a little bit of a cloud on the market. Actually all the results that we have seen so far are pretty ordinary and hardly exciting. There is nothing to make you excited and run to buy stock. The RBI policy has just been the trigger where now the reality of interest rate hikes is in a matter of months, not years. The market is just factoring it. The RBI policy has just been a trigger in a situation where anywhere the trends were quite weak."
Sudarshan Sukhani of Technical Trends is the most bearish. He feels the intermediate trend has broken which means that we are already in a correction. "The correction could be deeper, it is not necessarily going to stop in a day or two.
Rajat Bose, Technical Analyst, rajatkbose.com, says the markets might go down to sub-4,800 levels. "Sub-4,800 levels have been the place where there has been some support in the past. When the rally happened from July to early October, this was the place when the market consolidated when it was moving up, so between 4,800 and 4,743 there would be some support. But looking at the market picture what I find is that the trend line that you could actually draw from that low of 2539 on March 6, and 3918 on July 13 has been broken. Today, is the third day of the break. When you break a long-term trendline or at least an intermediate-term trendline which lasts for more than six months, a three-day fall should not be considered as too much of a damage because you require at least a couple of weeks to spend below that level."
Bose sees a pullback in market. "Generally, we find a pullback happening towards the trendline, although the trendline currently is above 5,000 levels. It is far cry at the moment, but there would be a pullback. The pullback might well happen from a level between 4,800 and 4,743. Still there is some downside left."
However, Technical Analyst Ashwani Gujral does not read too much into today's market fall. "In a couple of months, the market comes back and retests its 50 DMA (daily moving average). The last time it was around 4,400 and the market turned from there. The 50 DMA is important because a lot of institutions tend to buy at those levels."Satish Betadpur of Independent International Investment Research too does not see the markets correcting further from these levels. "The market was priced for perfection from an earnings and inflation-interest rate perspective. There are inflation expectations in the system and also earnings were not as good as expected. We wanted a perfect earning scenario where the topline grew, but here we have got better bottomline but the topline has not been very good in many sectors. Even if there is a correction, it won't be very deep because fundamentals on a medium-term are very strong in the economy. But we have to reset ourselves to lower earnings expectations going forward. So, maybe another 100-200 points on the Nifty."
Should you buy on dips?
Gujral advises investors not to panic and buy at these levels. "Investors should look at getting into the market around 4,730 to about 4,800, which was the breakout kind of zone. Right now, people should be looking at buying instead of trying to short the market. Those you short from higher levels should now be actually looking at covering those shorts. The next 50, 80 points is a good buying zone for most stocks. Even interest rates sensitive stock because the rates really haven’t been raised."
Like Gujral, Betadpur too advises investors to buy if the markets correct 100-200 points on the Nifty. He says IT, fast moving consumer goods (FMCG), and pharmaceuticals seems to be a safe haven in this market.
However, Sukhani says the next significant support for the Nifty is at 4,550. He advises investors not to buy in a hurry. "It is very difficult to say what’s going to happen between 4,900 and 4,550."
On earnings:
0 comments:
Post a Comment