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Buy or wait wonder investors as Sensex dips 807pts, Nifty sub 7k


Moneycontrol Bureau

Buy now or wait a while? That’s the choice investors are grappling with as benchmark indices breached psychological levels in Thursday’s free fall.

The Sensex shed 807 points to close at 22,952 and the Nifty tumbled 239 points to end at 6976. Both indices lost over 3 percent each.

Less than a couple of months back, an overwhelming majority thought 7200 on the Nifty was inviolable. After today’s bruising sell off, even 6500 does not look safe.

“The market is headed most likely further down,” Religare Capital Markets’s Gautam Trivedi told CNBC-TV18 in an interview earlier in the day.

“Emerging market funds have been hit by massive redemptions. Redemptions will continue especially from the sovereign wealth funds of the Middle East,” he said, adding that emerging markets in general would continue to reel under selling pressure.

Shares were under pressure right from the start, and the slide intensified after European markets opened sharply lower. Also, undermining sentiment was the disastrous quarterly performance by key public sector banks.

SBI’s December quarter net profit fell 62 percent year-on-year with over Rs 20,000 crore of restructured loans turning bad. Bank of India reported a quarterly net loss of Rs 1510 crore, as provisions for bad loans surged.

Bears’ domination of the market went unchallenged; every single sectoral index closed in the red, including defensives like pharma and healthcare.

Worst hit were shares from the realty, banking, power, auto and oil & gas sectors.

There is a growing view now that the current rout could get as bad as the one seen during the global financial crisis of 2008, if not worse.

With inflows into domestic mutual funds tapering off, there is hardly any supporting pillar for the market at present.

Some experts feel the market could be close to bottoming out.

“As per our fundamental framework,a downside scenario for 2016 was 7,000, so we are near that level definitely,” UBS’s Gautam Chhaochharia told CNBC-TV18 today.

“So, from absolute and fundamental perspective we are near downside scenario already,” he said.

The big worry for India has more to do with global developments than any domestic factors. And that is what is making it hard for experts to call the bottom.

“You are getting somewhere near the bottom; having said that you never know what is happening to global events,” Kotak Institutional Equities’ Sanjev Prasad told CNBC-TV18 on Wednesday.

According to Prasad, things were looking “somewhat brighter on the domestic front” with corporate earnings growth close to bottoming out.

Erstwhile Enam veteran and now Senior Advisor and Chairman, TPG Growth India, Manish Chokhani says it is better to start buying in a staggered manner.

“Bear markets are painful and you have to bear them; the market won’t come and tell you that the bottom is in,” he told CNBC-TV18 in an interview earlier today.

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