Bharat Thakur, assistant manager, Karvy Stock Broking said that market faced a very bad day today (January 21). A sharp fall of more than 2,000 points was seen in the mid session. Sensex closed down 1,408 points at 17,605 while Nifty closed at 5,208 down by 496 points.
He says that market opened with a gap down ahead of subprime crisis in the US economy and also no FII buying seen in the Indian markets in the last 7 days. Heavy selling was seen across the board, almost all the counters ended in deep red, down by more than 20%. Heavyweights were under pressure.
Market has strong support at 17,500 level, says Bharat. He expects market to open flat to negative on Tuesday but may bounce back after mid session as some institutional buying may take place.
Market growth story still remains intact, he added. He says that market corrected almost 3,500 points in the last 6 trading sessions so any upward rally from here on should be seen as an opportunity to exit long positions by investors.
Stocks to be watched out are Reliance Industries, Financial Technologies, Reliance Petroleum, Reliance Energy, IDFC, NTPC and Unitech, which are likely to move up in the near term.
Bhupendra Sharma, vice president, Hornic Investments said that today market had biggest single day fall of 1,400 points. Huge amount of selling was seen across the board though some short covering was seen in stocks like Reliance Industries, Orchid Chemicals, Jet Airways in the last 15 to 20 minutes of the trading session.
The entire market breadth was negative. Margin calls are being triggered, building pressure on investors. It is a dicey situation, said Bhupendra.
According to him, if some buying interest is shown by FII`s, markets may move up by 500 to 600 points or else markets will further correct by 1,000 points from these levels. Three consecutive support levels for sensex are 17,200, 16,800 and 16,200.
Such a market should be seen as an opportunity to buy value stocks, recommended Sharma. Stocks which clocked down more than 20% like Ispat Industries, Orchid Chemicals, Nagarjuna Fertilizer and also DLF remains a good buy at these levels.
Rohit Mehta, head equities, Dimpi Investments stated that morning corrections was more out of huge selling seen by brokerage houses to meet their margin calls and reporting requirement.
He states an example, typically if a client owed his brokerage house Rs 18 lacs, he would pay Rs 6 lacs via cheque and rest of the money would be taken away by selling shares worth Rs 12 lacs. But once his reporting requirement was met the client will again buy back the same shares. So according to him, this was the major reason for the market recovery in the last half a hour of the trading session.
Momentum stocks were the biggest losers of the day. He expects market to open weak on Tuesday.
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