Bharat Thakur, Assistant manager, Karvy Stock Broking said that the market witnessed one of the biggest falls today (Mar. 3, 2008). Sensex was down by 900 points, at 16,677; while Nifty ended below the 5,000 mark at 4, down by 270 points. Market in tune with weak global cues, had opened weak tracking the Asian and US markets. Traders are taking a cautious move on expectations of a weak US economy data to be released this week.
Banking and Retail brokerage houses felt the blow. Most the index stocks ended deep in the red. Suzlon Energy, L&T were among the major losers. Mid-caps were also trading down at the bourses.
Commenting on Budget `08-09`, Bharat said that it did not have any major surprise for the Indian capital markets apart from increase in short term capital gains tax rate.
He expects the markets to once again test 15,000 level before taking a bounce back. According to him, markets will open weak on Tuesday but can stabilize in the later part of the day on the back of some value buying.
Stocks to be watched out are Reliance Industries, L&T, HDFC and State Bank of India.
Commenting on today`s (March 3) market fall. Amitabh Chakraborty, President-Equity, Religare Securities said that the market had started on a negative note following the sharp fall in the overseas market on Friday. Budget proposals have rattled many of the FIIs and arbitrageurs. Loan waiver of Rs 600 billion without making any provision in the budget puts a question mark about the end-bearer of the largesse, while posing a question mark about the moral hazard of such a scheme.
The interest cost provision in Market Stabilization bond used by RBI to sterilize the Rupee has also been doubled in the budget, leading to speculations of government`s intention to keep the interest rates high, which is perceived to be negative for the banking sector and the economy.
There has also been an indication of an early election, as the government prepares for the final count down towards signing off the nuclear deal. Selling has been all pervasive, but without much volume. Market has broken 200 DMA today and also closed below 5,000 Nifty, which is also a psychological mark.
Market is clearly trying to find a bottom, and is taking cues from overseas markets. Credit environment in the US has deteriorated significantly. Valuations in India are still relatively high. We believe the market is trying to anticipate FY2009 earnings estimate, where risk to downgrade are prominent. Q4 08 results due in April hold the key. Meanwhile, market might test the previous low of January.