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Udayan's view on market: not a good time to invest
Published on Mon, Jun 09, 2008 at 23:21, Updated on Tue, Jun 10, 2008 at 00:26 in Markets section
Tags: Udayan Mukherjee, Stock Market , New Delhi
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New Delhi: It was a terrible day for the Markets on Monday and a bad start for the week. The Sensex just about managed to hold its head above 15,000. While the nifty slipped to its lowest point in 2008.
So, the Sensex finally closed down by 506 points. Nifty has broken the 4500 mark. It recovered 100 points.
Network 18’s Stocks Editor Udayan Mukherjee tries to find why the market performed terribly on Monday morning. He shares his views on what impact it will have tomorrow when the market will open to a fresh stand.
Reason For Fall
The immediate reasons for the fall are spike in crude back to new highs and the way the Dow Jones index collapsed on Friday.
But the disturbing thing is India's underperforming most other global markets in this fall. So while other Asian markets were down 1-1.1/2 per cent, India fell 3 per cent and that is very disturbing.
To revert this kind of sentiment some things need to happen either FII flows or foreign investors need to flow in and they have been pulling out money from India regularly or crude has to cool down to lift sentiments somewhat.
If those happen you can have a short covering rally somewhat because the market is short, most bears are very short on the nifty so there could be a short covering if the news flow imporves a little bit but other wise if that doesn't happen it looks like the news flow could drive us further down.
Troubled times
There is certainly a little disenchantment that global investors have for India because India's macro economics do not look good at this time and high crude oil price are making global investors even more skittish about India.
So it is no surprise that given Indian evaluation which are still at a premium to other global peer markets that we are underperforming on the way down. Year to date FII have sold more than 4 and a half billion dollars in India and that number is approaching 5 billion dollars.
And the way things are going I don't think things are not going to change soon. So all one can hope for is all these technical short coverings bounces from time to time, but otherwise things are very sticky from here on.
Tackling Markets
Be cautious from here on because it is no point going out and being brave and try to catch a falling knife.
The environment is extremely difficult for equity right now. Sure you could get trading bounces like you did last time, but they are not lasting very long. And market leading sectors are grinding down.
At this time preservation of capital is not a bad idea. It might turn out to be a missed opportunity on hindsight going forward. But in this kind of difficult environment you don't want to be very brave and put out your hardearned capital buying a lot of stocks.
Those opportunities might come later in the day, but right now prudence is the buzzword.
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Good advice but a wee bit too late, innit Udayan?
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