Share Bazaar News India

The dismal IIP numbers dealt a body blow to the markets. Strong global cues helped the markets get off to a flying start, but once the weak economic data came in, the indices cracked. The Nifty closed at 4,872 up 6 points, while the Sensex shut shop at 16,128 up 5 points.

JP Sinha of Mangal Keshav said it’s time for the markets to consolidate at the range we are in right now. "Last week, entire stocks were hammered down. This week, we are trying to recover what we have lost, added with couple of good news from across the globe. To an extent, it’s time to consolidate. However, there are couple of things which are still very high. One, rising crude prices and second, more skeletons which are likely to come out of the subprime crises."

"On the domestic side, interest rates continues to remain in the range which is higher than the normal expectation and that is impacting lot of sectors as well. We are seeing lower IIP numbers compared to what the expectations were. Interest rates which was likely to come down is not showing any signs of softening at this point in time and the impact of that is now clearly visible."

"So, if one asks whether around 16,000 levels are to watch out for? We will move more closely towards 17,000 to consolidate rather than being at 14,000-16,000 or being in the higher side 18,000-19,000. So, it’s time to consolidate at the range where we are right now."

Venkat Subramanium, Director, Gryffon Investment Advisors, feels the markets should slowly start some kind of stabilization and bottoming process from here.

"Today would have been a good opportunity for the market to sort of bounce back, which it did in the morning, but hasn’t been able to hold it. To that extent, it should go down as a disappointment. Given the extent of losses that the investors have suffered and the abrupt change in the sentiment, it shouldn’t be shocking to see that on the first available opportunity we have not gone up. I would imagine that the lows that we have seen in the beginning of this month should hold. We should slowly start some kind of stabilization and bottoming process from here."

He said there is worry is that are we staring at some kind of significant earnings downgrade, which is a worry that is keeping away fresh buyers from entering the market. "If that worry is proved to be incorrect going into the result season and if we find that companies are coming out with the reasonably confident outlook for the coming year, then we might definitely look back at these levels, as a sort of an intermediate bottom."
According to Subramanium, the market is not providing a trigger to act immediately for people who are sitting on the sidelines. "There is sense of wait and watch than having to rush in the market. There are investors out there who would like to participate in the long-term Indian growth story, but are right now being rewarded for not stepping in immediately and start buying. So, till one of that gives up, we will not see any big buying."

SP Tulsian of sptulsian.com said retail investors have taken a call that probably we have tested the bottom and we may not see a fall. “That has not come because of the Sensex having reached the 15,000-15,500 levels. But today's market behaviour will definitely shatter the confidence that was built up mainly by the retail investors in the last couple of days.”

According to him, investors want to see the market stabilize at some level. “I don't think anyone has any interest in the market. Everyone is expecting a recovery and wants to see the market stabilize at some level. They want to have certainty that probably it will not slip from thereon and only then can an investment call be taken. So, this has more or less become a trading market.”

Anil Manghnani of Modern Shares & Stock Brokers said when the markets hit such a major level or re-test a major level, the first test of it should see an upside bounce.

"But going forward, I am going to wait and watch this time because I know the last four years, you have seen this major bull market where markets hit a particular level and bounce and you have this V-shaped recovery. But this time the indicators are slightly different from the past occasions. I mentioned the 50-weekly, we hadn’t closed below that in four-years and we did that last week. If you take the major bottoms of the last four years 8,799 and 4,227, those two levels were never retested. After the market went up, maybe it did a 60% correction of the first upmove from 4227 or even 8799. They never actually went and retested 8,799 or 4,227."

"The fact that we re-tested 15,332 on Monday, and with the break of the 50-weekly for the first time in four-years, it’s telling me something different. It’s telling me at least this time it’s a little different situation then we have had in the past four years. So, maybe you need to pay attention to why these things have happened today that has never happened in the past. Now, since this is happened, I will be a little more cautious in trying to find the bottom, and rather wait for a bottom to emerge or wait on the corresponding bounce suppose bounce. Suppose that 15,332 is to be a bottom, wait for the corresponding bounce to show enough strength."

According to him, 4,900-5,100 is a very important resistance zone for the Nifty. "On the Nifty, I would be a little more convinced at two important levels 4908-4967. This is the 50-week simple exponential. If you take the simple 200 DMA is 5060-5090. So, anywhere from 4900-5100 is a very important resistance zone for the Nifty. Correspondingly, the Sensex’s 50-weekly simple and exponential is anywhere between 16,600-16,800 and we did exactly about 16,683 today on the Sensex. On the top, that 50-weekly is proving to be resistance for the Sensex which was a support over the last four-years. I want to see these levels cross decisively and sustained before I go out and make a call that well 15,332 has been re-tested so a double-bottom has been made."

Michael Preiss of HSBC sees 12,000 on the Sensex before long-term net buying comes in. “At the moment, more and more people would agree that it is the trader’s market and not an investor’s market. For the last couple of falls, buying on dips was the right strategy. Now, it is in everybody’s interest to be defensive in their portfolio. If you buy stocks, buy stocks of good quality and high dividend yield and stay away from the short-term fluctuations and try to pick a bottom because the bottom potentially is much lower than what we think it could be.”

Source : Moneycontrol.com