Sensex loses over 2,000 pts this year
Mumbai, Jan. 28: The Sensex fell for the third consecutive day on Friday with stocks across the board being hammered on continuing concerns that inflation may invite a further hike in interest rates and lead to a slowdown in growth. Added to this is the political ennui that has gripped the government. “Until the government gives a firm policy direction to the economy, there will be little commitment to invest in the market,” says strategic analyst Rajesh Jain. Friday’s fall was due to a combination of momentum selling, fresh shorts, profit taking by FIIs and some panic and “this is causing the return of risk aversion,” he says. However there’s a silver lining as FIIs are also buying, it is not as if its quit India for them. You can expect some bounce back before selling starts again, he says .
The Sensex has lost 2,186 points since the first trading day (January 3) of this year and nearly 13 per cent since Diwali. “In fact what is happening is the reverse of what was witnessed between June to October last year,” says Mr Ambareesh Baliga of Karvy Stock Broking. The hot money and exchange traded funds that came in when the Indian markets were outperforming the emerging and other markets are now going out as India is underperforming the emerging and developed markets. There is also some proof of the US recovery and their markets that had underperformed so far are seeing a decent valuation. So FIIs are investing there. Mr Baliga expects that $4 billion could flow out.
On Friday the realty index fell 5 per cent with DLF leading the fall at 6.7 per cent while auto, capital goods, power and metal indices were down 2.3-3.5 per cent. Among the gainers were blue chips like ONGC, ICICI Bank ITC and Bharti which helped the Sensex pare its losses by nearly 80 points by the close of trade.
Traders and investors preferred to exit their long positions as the Nifty was unable to stage a pull back above its crucial long term moving average (200-DMA) said Mr Amar Ambani of IIFL.
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