Mumbai: Markets opened in the red on Monday morning and the downtrend only got stronger since then. Banking led the way in this downslide on the back of the RBI's latest rise in CRR. As the day proceeded, it proved to be more of a red screen for the markets. The Sensex plummeted over 400 points.
This sharp fall was not really expected, considering the fact that last week when the Sensex crossed 14000, the consensus of the street was powerfully hinting towards 15000 on the Index by the year-end. With 2007 merely a few days away, is this correction that we see today, the beginning of the end of this bull run? Experts spell out the future possibilities for the markets.
Asian markets have been trading weak over the past few days. So this could well be a reaction to regional peers. However, on the whole, the fundamentals of this market are still strong. And India is viewed as one of the best performing emerging markets.
The international investors are still pretty bullish on the India story; there are no signs of withdrawal of money on that front. As valuations seem to be of concern to investors, this correction could be a healthy stepping-stone before the markets scale new heights.
Jagdish Malkani, Member of BSE, says that he has been expecting a correction for while now. However, he says that this correction does not come anywhere close to the one the markets saw in May. “Global factors are still too strong; the emerging markets sentiment and most importantly the India sort of positive news.”
Technical analyst Ashwani Gujral says that the next crucial level to look out for on the Nifty is 3780-3800, as these levels, if broken, could result in high futures positions and a cascading impact.
“I would go long once we are able to regain 3915 and probably stay out of the interest rate sensitive sectors, which would include banking, autos, realty and metals for a bit and stay with technology, capital goods, construction- things which are not so much related to the interest rate kind of scenario,” he affirms.
Sharing a similar view, technical analyst Sudarshan Sukhani says that whenever the relief comes in, old favourite- IT would lead the way up. “Good companies will be going up and the stocks that are dragging down will continue to drag down, and that is the auto pack and the metals pack. So I am a little downbeat on both of these sectors just now.”
Investment advisor PN Vijay maintains the view that the markets will continue to scale new highs right up till the end of January, as there is not enough evidence to pull the markets down currently. “There is blood on the street, but I think that we will get back into a sort of normal situation with a bit of a trading range and then the liquidity flow should takeover.”
Deven Choksey of KR Choksey Securities believes that this fall is largely due to the lack of fresh buying in the market. Even at these levels, he does not see people panicking in the market as such.
From a global perspective, Eoin Treacy of Fullermoney.com says that there is not much to worry about at the moment. He is still rather positive about the India story. “Once we see the first good upward sign of confidence returning to the market, it will be a buying opportunity for India.”
Indian markets have had a very good run over the last six months, and the world is enjoying its piece of the pie. Will the markets continue in the red for the next couple of days? Only time will tell.
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