US recession fears wreaked havoc and the markets closed with huge losses inline with its Asian peers. Markets across Asia closed in red on weak cues from US on account of credit concerns. Nifty closed at 4,758 down 163 points, while Sensex shut shop at 15,913 down 629 points.
Experts feel that it’s difficult to say where the markets will stabilise. So one has to wait and watch as it is definitely falling with thin volume with little participation and a breakdown of sectors which not necessarily have any fundamental change in their performance.
Speaking on markets, Amit Dalal of Amit Nalin Securities says that liquidity available for the equities will remain shy until market shows any positive trend. "There is no way the market are going to attract money if they continue to fall every 2-3 days and that’s not going to change until the advance tax filings are over. So it is going to be dull, you need some indicator or leadership by which you can look at markets attracting money again which I don’t know of right now." he said.
Market analysts believe that whatever was expensive and with higher PE index will definitely become much cheaper. So capital goods, engineering companies, private sector banks will become definitely much cheaper. They feel that if there is any economic slowdown, then we will see a huge long period of lull and very little happening in the stock market but these are stocks may give good investment opportunities if they fall 20-25% from here.
"It’s a market of excesses,” says Nilesh Vasa of CD Equisearch. "The fundamentals don’t have any importance at the moment and the levels are not significant. The mood is definitely sulking and somber but the advice from investment strategists to them is that it doesn’t make sense to panic at these levels, because what’s going to happen is that you are not going to be able to sell now and possibly buy back later because in case it comes down, then the situation would be much more darker at that point of time and that would not permit you to buy back these stocks which you have possibly sold now. So it’s a strict no sell at the moment, from the advisory angle, in spite of the mood being really bad and a bit of nibbling and you have to actually start looking at valuations at some point in time." he adds.
Ambareesh Baliga of Karvy Stock Broking said that people are tired of holding on to stocks as they are in fact seeing losses by just holding on to them. According to him, selling is coming from those quarters. He added that thought the market may look good fundamentally, people are still not convinced about it and hence, don’t want to commit their funds right now.
Baliga said that this is a market for investors who actually have the patience to hold on to their investments for a long time. According to him, at this point of time fundamentals look decent.
“Ultimately it’s a greed and fear story and there was greed on the upside and now there is fear on the down side and one has to possibly find a mid-path where this capitulation would also stop and people will start looking at valuations with a positive frame of mind. That fear element will also drive away. Its just a question of people are just trying to find the bottom, which is not a very advisable thing to do, what is more significant is that one should possibly start buying and not look at it for sometime, that will be a better approach to it.” adds Vasa.
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