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Market Report

Tuesday, 08-July-2014

NSE

  • Hit by profit booking, the S&P BSE Sensex slipped as much as 605 points today after hitting record highs in trade, as Railway Budget failed to live up to market expectations and sparked worries about subdued government expenditure in the Union Budget due on Thursday.

  • The BSE Sensex finally closed -1.98 per cent or 517.97 points lower at 25,582.11 today. It hit a low of 25,495.05 and a fresh lifetime high of 26,190.44 in trade today. Tracking the momentum, the 50-share Nifty index also witnessed some bit of profit booking at higher levels. The index breached its crucial psychological level of 7700 after hitting its fresh lifetime high of 7808.85 earlier in the day. The 50-share Nifty index finally ended -2.11 per cent or 163.95 points lower at 7623.20 today. It hit a low of 7595.90 and a fresh lifetime high of 7808.85 in trade today.

  • On January 27, 2014 both the Sensex and Nifty ended 2% lower. In absolute terms, today, the benchmark indices recorded their highest fall since September 03, 2013. Most of the railway-related stocks, which surged to their fresh 52-week highs ahead of the Rail Budget, pared most of their intraday gains as Railways Minister DV Sadananda Gowda was presenting the Railway Budget. Later, the protests in Parliament by various opposition parties led to the extended sell-off.

  • There is one important point that should be noted regarding today's fall: First, Foreign Portfolio Investors (FPIs) have been net buyers today, just like every day of this month, even when the index has gone down so drastically. So, it is not like the FPIs have lost faith and started to sell. On the contrary, it looks like they were responsible for the initial rise that saw fresh all-time highs. It was, in fact, the retail segment that has sold heavily today and caused this downfall. See our 'Market Statistics' page.

  • Globally, it was a quiet session in Asia, with the region's stocks tracking sideways as the earnings season kicked off with disappointing guidance from regional tech heavyweight Samsung. Europe's main stock indices and bond benchmarks dipped today amid reports of new US fines on banks and dimming prospects for an asset purchase programme from the European Central Bank.

  • Our sense is that this run-up that we have seen so far is here to stay for a while at least till the pre-budget day and one should hold long positions, says Vinay Khattar of Edelweiss Financial Services. But after that the risk reward ratio becomes hugely skewed in favour of risk because we still do not know what kind of budget will be announced. We must not forget that there is a large amount of expectation which has been built up and all kind of numbers are doing the rounds. So, a day or two prior to budget, it would make sense to cut beta to certain level and for long only position, to hedge your positions to certain extent, he added.

  • Yes, it is possible for a near-term fall since typically investors are not able to absorb the implications immediately and there is a lot of volatility on Budget day, said Dr. Vikas Gupta of Arthveda Fund Management Pvt Ltd. However, it is unlikely that there will be a big fall, he added.

NIFTY 3-Month

(Data/Charts courtesy NSEI/Yahoo!/iCharts/The Economic Times)