Nifty ends below 5800: Has interest of FIIs dipped?

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Nifty ends below 5800: Has interest of FIIs dipped?

The benchmark Nifty shut shop below the 5800 - a psychologically important level - on settlement day for November. Build up of shorts, selling by foreign investors and lingering effect of the housing finance scam could have been the reasons behind today's sell-off.

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Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

The benchmark Nifty shut shop below the 5800 - a psychologically important level - on settlement day for November. Build up of shorts, selling by foreign investors and lingering effect of the housing finance scam could have been the reasons behind today's sell-off.

The indices closed at a two-month low and maintained the downtrend for the third consecutive day, dragged down by realty, metal, capital goods, oil & gas, power, FMCG and ADAG companies' shares. On the other side of trade, heavyweights like Infosys, TCS, Bharti, HDFC, HDFC Bank and Hero Honda managed to limit their losses.

Real estate companies' shares completely slaughtered; the BSE Realty Index crashed 5.4% today and tumbled 11% in three days. Mumbai based realty companies hammered the most. DB Realty plunged 10% today and 40% in last five days. HDIL and Orbit Corp fell 8-9.7%. Ackruti City , Anant Raj Inds , DLF , Indiabulls Real Estate , Peninsula Land and Unitech slipped 4-6%.

In an interview to CNBC-TV18, Ambareesh Baliga, VP, Karvy Stock Broking, Analyst Ved Prakash Chaturvedi and Rahul Mohindar spoke about the safer bets in the markets and their respective pick.

Here is the verbatim transcript of their comments. Also watch the accompanying videos.

Q: Wanted to get your thoughts on the kind of FII interest now. Do you expect to see any denting of sentiment because of the kind of repeated scams that our market has been hit with?

Chatturvedi: I think that overseas interest in India is going to be absolutely fantastic. I have just come back from the US in the previous week. Having met some of the largest fund managers in the US and I can tell you that there is such enormous interest in emerging markets and in India and there are several of them who have not yet started investing here and given the fact that their domestic economies are not doing well they don't see return in their own stocks. I can say with absolute confidence that short term there may be some pause, they may reassess what sectors they want to overweight.

They may reassess what kind of companies they want to go into. I think there would certainly be focus in three areas, people would want to be in companies which have high corporate governance, people would want to be in companies which are not affected by political fluctuations if any because there are lot of political clouds on the horizon and people would want to be in companies which are very domestic focused and benefit from the growth of the Indian economy, with these caveats I would suspect that the FII interest in India will only grow in the coming months and years.

Q: After reacting to the news and digesting it, you think the market will move on from here or do you see some of these sectors still under pressure?

Baliga: The issue right now is like I have been saying we are in a scam season and every morning we get up to find out whether there is any news scam brewing. Unless this stops and unless we have fresh new scam news coming I think possibly the markets can hold on and we could have discounted whatever has already come.

But in case we have any fresh scams coming further then yes we could see a deeper cut from here. Like I have been saying 5800 is a very crucial level where we have taken some support today but if that breaks then we are in for trouble.

Q: Do you think there is a bit of covering going on towards the end - would you cover up shorts if you had initiated in the middle of the day.

Mohindar: Not really. I think we are going to be sub 5820 or around 5800 tentatively and I would maintain short positions. I would probably tomorrow you would see levels like 5750-5760 come in at intraday trade.

Q: Although a lot of being said about how they won't be a systematic risk one does hear that perhaps there will be some more stringent norms taken - there maybe a slowing down of loan growth as well for the PSU banking lot. Do you fear that going forward it may impact perhaps in the next couple of quarters the results that some of these PSU banks may showcase?

Baliga: It is possible because see the first reaction that will normally come is a damage control exercise where you will clearly say that the asset quality is not impacted. I think we need to go ahead and possibly over the next couple of months we will actually get to know whether the asset quality really impacted or not so that is one question mark which is still there.