Intense selling pressure erased early gains with indices closing in red, amid volatility. Experts like JP Sinha, Mangal Keshav & Robin Griffiths, Cazenove Cap see downward pressures plaguing mkts. Sinha feels rising crude & raw material cost will put pressure on mkts going fwd.

It was yet another volatile session on Dalal Street. Intense selling pressure erased early gains and the indices closed in the red. At close, the Nifty stood at 4,958 down 55 points, while the Sensex shut shop at 16,753 down 108 points.

JP Sinha of Mangal Keshav said the market is likely to face downward pressures on account of boiling crude and rising raw material prices. "There are signs of growth moderation in Indian markets but it’s still much better than most other markets. There is downward pressure but the market resilience is keeping it afloat. We will see some more downward pressure because of the negative environment particularly on account of rising crude and raw material or commodity prices."

Robin Griffiths, Technical Strategist, Cazenove Capital Management, said the cyclical correction would probably last. "The Sensex needed to have a cyclical correction after touching 21,000 and those corrections are likely to be moves of one-third to 50%."

He is confident that the long-term secular trend for the Indian stock market is upwards. "However, we are in the midst of a cyclical downward correction."

He feels the reforms process can slow down if there is a coalition system at the Centre. "The rate of inflation is running at around 7.5% and that might easily pick up to 8.5% and that is often an election loser. We are coming up to an election season. With food and energy prices inflating, that adds an element of uncertainty on the political climate, because coalition governments, if that is what one has to end up with, tend to slow down the rate at which good reforms can take place."

According to Griffiths, the Indian markets are about five months down from their highs and that is an extremely short period to be in a bear correction. "One would normally expect it to last for nine months or something like that. So, I certainly think in the summer months we will have more downside risk. We don’t necessarily have to go a long way lower than 15,000. But I am looking more at 14,000 as the likely end to this cyclical correction."

Vijay Bhambwani of bsplindia.com said investors need to be very strict about your stop losses as the markets are very choppy. "5,075-5,080 is a pressure point for the Nifty, which needs to be surpassed convincingly, if investors are to either initiate fresh longs or hold big ticket trades on the long side. At this point in time, if you are holding small quantities on the longs, you may continue to hold."