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Market Report

Wednesday, 03-June-2015

NSE

  • The Sensex plunged 351.18 points, or -1.29%, to close at 26,837.20 and the Nifty dropped 101.35 points, or -1.23%, to end at 8,135.10 today, after a 196.95 point fall yesterday. In the broader market, BSE Midcap and Smallcap indices underperformed the larger peers and lost -1.2% and -1.8% each.

  • It was the second straight day of carnage on Dalal Street, and the 50-share Nifty broke below its crucial level of 8200, a day after the RBI disappointed the market effecting a 25-bps cut in repo rate even as the Dalal Street had pinned hopes on a surprise 50-bps reduction. Markets continued its steep downfall and closed lower as weak monsoon forecast raised fears of a drought while delay in further rate cuts and slow pace of recovery in the economy dampened sentiment.

  • Meanwhile, India's services activities dropped for the first time in the span of thirteen month on lack of demand which weighed on the market. Adding to this was IMD downgrading its forecast on monsoon to 88% from earlier 93%. Rupee also fell sharply against the US currency, hitting day's low of 64.06 against the greenback at the Interbank Foreign Exchange.

  • The intensity of the ongoing correction suggests that the pull-back rally in the market, which began at a low of 7997 and extended upto 8,489, is over, say experts.

  • Use any upside to create short positions on rate-sensitive counters, says Ashwani Gujral. One can expect a couple of weeks of softness in the market. Any 50-70 point upside on Nifty should be used to go short in PSU banks and other rate sensitives that came down sharply today and were bouncing back on some sort of news, he adds.

  • Nifty finding support at lower levels; book profits on short positions, says Mitesh Thacker. There was a gap, when the Nifty bottomed at around 8,000 levels. The index was seen taking support and bouncing back from the level. Therefore, for the time being, one can book profits on short positions and wait for a pullback to about 8,200 levels. That is the level when I would possibly look at buying into 8000-strike puts on Nifty, he says.

NIFTY 3-Month

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