New Delhi: From 12,671 on the May 11 to 10,000 points now. It has been a one-way fall for the Sensex. Even at 10,000 points foreign funds say the market is overvalued.
Foreign Institutional Investors (FIIs) have pulled out about Rs 7,500 crore from Indian stock markets since May 22 leaving behind the fear of a liquidity crunch.
Besides the apprehension of a further fall other worries have also surfaced.
Investors are uncertain about interest rates and are concerned about a volatile rupee.
Looking at the instability, Investors across the markets are wondering if this is the beginning of the end of the bull-run.
However, some experts feel all might not be lost.
"We are going to end the year not too far from where we are now. Maybe up a little to the 11,000 target that we have maintained. But in that mix, overtime, I think you are going to see Japanese investors continue to put money into the market," said David G Fernandez, Head of the Emerging Asia Research, JP Morgan.
Other experts are even less kind. Nomura, one of the largest Japanese funds, which raised about $2.5 billion for India since June last year, has also turned bearish.
Its target is an astounding 7,000 mark, which it says the Sensex will touch in the coming months.
While the Luxembourg based wealth management firm, UBS appeared more optimistic as its brokerage cited a fair value target of 8,800 for the Sensex.
What seems to have turned the tide against India is a perception that Indian stocks are overvalued in comparison to those in other Asian markets.
Both Nomura and UBS believe liquidity concerns will remain in the limelight.
Even so, investors might also be underestimating the extent to which a stock might be hit by unwinding of open futures contracts.
That's a phenomenon that is playing itself out now. Within less than three weeks the attitude towards Indian stocks has changed drastically and it seems the bears will linger on.
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