Sensex falls 412 pts: Where do we go from here?

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 09/02/12 Are Mutual Funds betting on Nifty?

Tuesday afternoon unfolded like a rerun of last Monday's episode, much like a recurring nightmare. Markets ended in deep red, thanks to heavy selling seen in scrips across sectors, triggered to some extent by the developments in the Thai markets.

 

Asian cues were extremely negative with Thai stocks - plunging after the Central Bank declared that overseas investors would have to pay a 10% penalty to withdraw funds within a year. The Sensex closed down 349.08 points at 13382.01, and the Nifty down 96.75 points at 3832.

 

But is there more than what meets the eye? Experts debate the underlining factors that caused the slide, sharing their views on a stance markets will most likely take going forward.

 

Technical analyst Rajat Bose feels things have weakened in the market and that intermediate uptrend which was going one way up for the last five months or so is already through. "My opinion is we have entered into a highly volatile sideways kind of a market. It may actually result in some kind of a downswing, though it is too early to say that the downswing is very much in place."

 

Vibhav Kapoor of IL&FS believes this fall was due to a combination of factors. "The markets have been very volatile in the last one week-ten days, which indicated that at higher levels, there was nervousness in the air, partly because of the stretched valuations, partly because of the weak IIP numbers, as well as increase in the CRR by the RBI," he says.

 

"Today of course the Thai situation certainly didn't help at all because it probably imposed some nervousness into the Asian markets as a whole. So the risk aversion probably is gone up because of that," he adds.

 

Rajesh Agarwal of CD Equisearch agrees, "The kind of fall we saw was the repercussion of the Asian market; Thailand Index felt around 10% and was locked under lower circuits. Moreover even the US markets were down yesterday. The rally, which we have seen in the last four days, was on a very lower volume, so this was all due to that," he says. But he is positive that in a day or two again, the markets can see a rebound.

 

"Actually the problem is that retail participation is not at all there. You have seen the market is moving only in the frontline counters, the midcap have not participated in the rally," he explains. Therefore he believes there are value plays in midcap space and once the market falls to a certain level, value buying may emerge from retail as well as institutional side.

 

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