Bears take centrestage; uncertainty to continue: Experts

After a lackadaisical few days on the markets, Sensex crashed 300 points and Nifty went down 100 points. The bears won the battle for today. 

After last few sessions of sluggish trade the markets saw a deep crack today and ended with some hefty losses. It was trading flat for major part of the day but saw a heavy sell off during the later part of the day. On the F&O side there were concerns of discount widening, Nifty closed with 27 points discount.

It was a bad day for European markets as well but most of the Asian markets ended flat.

The broader markets also ended with deep cut, but the frontliners underperformed the midcap and smallcap indices. The market breadth was extremely negative and this fall has been in huge volumes.

IT index which was holding in green for better part of the day gave up its gains and closed in red with moderate losses. 

The morning was boring and the afternoon was weak. Suddenly out of no where came a sell-off led by a lot of the large cap stocks, after which the Nifty hovered close to that 4,200 mark again. The Sensex also took a bit of a knock back down to 14,300. Markets sold off dramatically in the last half-an-hour of trade. And it was led by all the heavy weights -  ONGC, Reliance, RPL, big steel stocks like SAIL and Tisco, HDFC, SBI, PNB, ICICI along with some of the smaller banks. Midcaps have participated in the sell-off as well. Advance decline is not looking good at this point. This has been the biggest single-day point fall since April 27.

Top losers on the Sensex are Tata Motors down 3.87%, ONGC down 3.05% and HDFC down 2.4%.

The markets could not breakout last week despite all the positive news flow, strong GDP numbers, steady US markets, smooth rollovers and monsoon arrival. This means there could be selling pressure at higher levels and therefore any global reaction can lead to a fall in the markets.

Gautam Shah of JM Morgan Financial Services says, “I think the battle lines are clearly laid - 4,200 is turning out to be a strong support level for the bulls and at the same time 4,300 is turning out to be a huge resistance to surpass for the Nifty. And in the extreme short-term, we might just see a little bit of selling pressure coming in that could lead to a small correction.”

There has been a run up across the globe. Anand Tandon of Gryffon Investment Advisors says, “The way the Chinese market has been reacting in the last couple of days, a higher level of volatility would indicate that there is downside pressure on the market and not just on India.” So from that point of view, Indian market may find it difficult to go up from here on.

Nilesh Vasa of CD Equisearch says, “Whenever a new settlement opens, there is a rollover from the earlier settlement. When people are hunky dory on the markets, that is exactly the time when the operators or the large players choose to bring down the market. Because there has been a lot of free riding in the last two or three sessions, after the new settlement opened.”

So, there is a bit of panic, more knee-jerk than anything else. At these levels or 25-50 points lower on the Nifty, there could be some buying. But whether the earlier levels will be seen quickly will remain a question.