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What next after Mon sell-off?, experts analyse likely trend

Global markets sold off on Monday, led by China as investors fretted about the implications of a slowing Chinese economy for the rest of the world.

Indian equity benchmarks fell around 6 percent, with the fall in second line shares being much sharper. With Monday’s slide, the Sensex has fallen around 2137 points over the last week and the Nifty by 668 points.

Here is what the experts have to say on the near trend for India as well as global markets:

Michael Kurtz, Chief Asia Equity Strategist, Nomura is optimistic on India in the ex-Japan Asian region on back of domestic growth cycle and policies, but is worried about the Chinese recovery and growth.

Viktor Shvets of Macquarie says that deflationary pressures are on a rise and believes that there need to be significant change in fiscal policy; otherwise, the situation could worsen further.

Khoon Goh of ANZ Research says that emerging markets will remain under pressure for some time and expects capital outflows. Despite positive like low commodity prices and policy movements, ANZ has downgraded rupee following the yuan devaluation, he says. Goh expects rupee to be 66.8 for dollar by this year end.

Contrary to the above views, Geoffrey Dennis of UBS says that it will be difficult to find a bottom and a buying opportunity could emerge soon. He says that this global crisis situation is an overreaction to the current falling Chinese economy.

The current global crisis puts a question mark on limits of policy actions, says Arvind Sanger of Geosphere Capital . He expects the global market to remain under pressure till the current headwinds are dealt with.

Hartmut Issel of UBS is bullish on developing markets and not the emerging markets (EMs). He says economies like Europe and Japan could help in quantitative easing. He also feels that a Federal Reserve rate cut in September could lift market sentiments everywhere.

Sanjay Dutt of Quantum Securities says that 7900 is a good support level for the Nifty. He expects policy actions from Central Banks to normalize the volatility in the global market. He also recommends this as a good time to look at companies, at lower valuations, both in domestic and international markets for investment.

Nirav Sheth of Edelweiss says that more worrisome is the weakening control of China over its monetary policy. He says rupee depreciating against the dollar would be felt in corporate earnings, especially in industrial and pharmaceutical sectors. He believes that the market will rebound within the next months.

Atul Suri , an independent trader, remains bullish on Indian market and says that the Indian market will be one of the first to bounce back from the current fall. He says this correction will lead to buying opportunities for investors. He is bullish on IT and pharmaceutical sectors.

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