New Delhi: Just when everyone thought the markets were stabilising, the markets crashed again.
The BSE Sensex was down 600 points on Wednesday morning.
ONGC, BHEL, MTNL, Grasim, SAIL were down by over 7 per cent.
How do technical and fundamental analysts view this crash? What do they suggest now?
Rajat Bose, Technical analyst:
Bose says it is difficult to say that the markets are stabalising as all the supports have been broken.
"One has to be vigilant at all points of time. But with open interest increasing, I believe the shorts are now becoming more and more powerful," he says.
He further says, "Taking a contrarian call here might be catching a falling knife. So I would not attempt to do that. Maybe, I would not go short fresh but then I would wait to see whether some kind of a balance coming in."
Sudarshan Sukhani, Technical analyst:
Sukhani agrees that the correction is not yet over and is still continuing and that one is still looking at lower levels.
He says, "But even now it appears that we have gone too far below to look at a decent correction on the upside. We are going to meet these downside targets. So rallies should be used to lighten up by traders who have bought and also for more experienced traders to go and sell."
Regarding the Nifty, Sukhani says, "After giving caveat and caution, I think we will come back to 2750, where very strong support comes in. That range is between 2625 and 2750, sooner or later. I am not saying that it is going to do that today, but it will happen in this process of a correction."
Anil Mahgnani, Technical analyst:
"Nobody has expected the 600 points fall in any given day; no doubt volumes are lower, but it is still a problem," says Maghnani.
He continues, "Today 10,294 was an important level; it was imperative that doesn’t break. Now that it has broken, if it can close above 10,294 on a closing basis, that might still be some solid for the market."
"I think I will just watch out if the market can close above 10,300 fair enough. But otherwise, it could be again trouble time for the next 15 days or so," he says.
He further says, "Hypothetically speaking, suppose if we go back to 9,800 levels again, these stocks can actually fall more than what they were at the first time we hit 9,800 levels. That is the fear I have."
He believes that is one of the major concern that most technical analysts would have.
Vibhav Kapoor, IL&FS Investsmart:
"The market could fall more than proportionately on low volumes and therefore the recovery whenever it happens, or whenever one gets some positive cues from the global markets could also be sharp," says Kapoor.
Therefore, he believes the market is going to trade in a very volatile manner for a few days to come and that one could see upswings too, but only if some positive data emerges.
"The market has to go through this whole bit of consolidation for a reasonably long period of time. So time is an important factor here," he explains.
He therefore makes the point that since the markets have had such a long bull run, the correction also should take at least a few weeks.
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