Mumbai: The mayhem in global markets sent the Indian market crashing but a late recovery helped the Nifty defend the 5,200 mark. The global markets haven't seen falls like this since the height of the financial crisis back in 2008-09. Broad-based selling across asset classes wreaked havoc on the sentiment back home too.
The 30-share BSE Sensex fell 384.31 points or 2.19 per cent, to close at 17,305.87 after seeing recovery of 315 points from day's low.
Nitin Rakesh, MD and CEO, Motilal Oswal Asset Management Company suggest it is best to start buying now else it will be too late as one really does not know whether this is the beginning or the end of the short fall. There is something to cheer up investors as Rakesh feels that India is much more attractive in terms of valuation today than 10 days ago.
Rakesh is hopeful that the downside will be positive for India. However, he quickly adds that if the global markets fall further shockingly then India should wait for triggers from RBI. 'If they start changing the stance the old saying that we should buy equities when fixed deposits are at 10% will actually hold true again here," he explains.
Rakesh also adds that any volatility in crude price may drag us down. “But in the medium to longer term period correlations tend to break down between our market and the global market. If we see a sharp downfall in crude definitely below the USD 100 physiological level, it will indirectly improve the fiscal situation. So, a lot of headwinds we have been facing will definitely get a little muted with that and the pressure will ease off. I think that might just be the very first trigger for a chain of events to unfold over the next few months,” he elaborates.
Agreeing that valuation of Indian market has become attractive, Dipan Mehta Member BSE and NSE is little worried that it still has risk of falling further. Mehta, says, best strategy to enter the market would be on strength and not buy into weakness. “It is best to buy when the market is 5-10 per cent higher,” Mehta adds.
Mehta stresses that one can enter the market, when there is a change in the pattern of lower bottoms and lower tops which is likely to be in two to three months. According to Mehta, then the shopping list should have banks, capital goods manufacturers, auto companies and technology stocks.
Devangshu Datta, Consulting Editor, Outlook advises to use trailing stop losses. “If my position goes into the black I will move the stop loss up or down as appropriate. Like for example today my stop loss would have moved down by about 100 Nifty points, if I was sitting on a futures position. So if you are using a trailing stop loss, you will get stopped out. If you are looking for levels I would say set a level at 5250 and then again at 5300, and third level at 5350 depending on your inclinations, on your personal convictions, any of these three 50 point differential levels could work for some one who is holding a short position,” Datta explains.
On an optimistic note, Datta is expecting the market to bounce by either Monday or Tuesday. Datta says that market will face massive resistance at the 5325-5350 levels.
Meanwhile, Manoj Murlidhar, Head of Derivatives, IIFL PReMIA explains that buying 4900 and a5000 put was simply to hedge the positions by cash traders and it will offer a good risk reward. Murlidhar feels that the Nifty will be in the range 5060-5400.
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