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Market Report

Thursday, 07-May-2015

NSE

  • The S&P BSE Sensex closed down 118.26 points, or -0.44 per cent down at 26,599.11 today, while the broader Nifty fell by 39.70 points, or -0.49 per cent to close at 8,057.30 today.

  • After falling over 700 points in the previous session, the Sensex extended its fall today for the third straight session, closing at its lowest level in near 6-1/2 months on continued selling by foreign investors. The Sensex closed at its lowest level since October 21, 2014, while the NSE index finished at its lowest level since December 17, 2014 due to persistent selling by foreign institutional investors on MAT concerns. Weakening of the rupee and rebound in crude oil prices further dampened sentiments.

  • Notably, the Sensex has lost over -11% or 3,300 points from its life-time high of 30,024.74 reached in early March this year. The short-term weakness in the stock market is likely to remain, but that should not deter investors from picking stocks on every decline, say experts. The benchmark index could fall by another 500-700 points, before it resumes its uptrend, they say.

  • FIIs sold shares worth a net Rs 1,699.60 crore yesterday and another Rs 1,360.69 crore today, according to exchange data. Overseas investors have pulled out nearly Rs 10,000 crore from the Indian capital markets in the last four trading sessions amid taxation worries, after infusing huge funds in the first three months of 2015. The huge sell-off comes on apprehensions that the government would impose a 20 per cent minimum alternate tax (MAT) on profits earned by overseas investors. The income tax department has sent notices to 68 foreign investors for payment of dues totalling Rs 602.83 crore towards MAT.

  • A significant fall in the rupee against the dollar is helping top tier information technology (IT) stocks recoup some of the gains lost due to weak quarterly performance. Some analysts expect a further drop in the rupee. It is expected to trade at 65 against the dollar by the end of 2015. This prognosis may support IT stocks in the coming trading sessions. Another factor that goes in favour of IT exporters is that the June and the September quarters have historically been of good demand and high growth in revenue and profits.

  • Wait for 'Modi trade' to unwind before taking fresh positions, says Ashwani Gujral. The levels below 8,300 on Nifty saw a breaking down of a head and shoulders pattern that was ranging between 8,300 and 9,100. If you substract the range (800 points) from 8300, you get a new target of 7,500 on Nifty. Because of the fall in rupee or rise in commodity prices, you may see a major downside. Intraday rallies will come and go. I do think that investors should be worried unless we are able to sustain above 8,200. But overall the trend is down and this entire Modi trade will unwind, before the market is able to build fresh strength, he says.

  • Banking is the best space to go short into, says Sandeep Wagle. Bank Nifty is the weakest among indices. At Thursday's close of around 17,400, an upmove may take the banking index towards 17,600 levels, but I do not see the index going beyond that level. On the flip side, I would talk of a 16,700 level on the index. I would play for that 700-point downside. I may even think of shorting the index at the current levels or on any bounce back which may not be substantial, he says.

NIFTY 3-Month

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