Market Analysis: D-Street shivers as pessimism sets in

The logjam in Parliament yesterday triggered the crash, and the weakness extended into trade today. The benchmarks were able to recoup some of the losses today, but the broader market took a beating, with the BSE midcap and smallcap indices falling over 1%. Meanwhile, the Sensex fell 47 points to 17,631 and the Nifty declined 15 points to 5,334.

Overall the market has been in a consolidation phase, moving in a range of 5300-5400, ahead of expiry on Thursday.

The US Federal Reserve Jackson Hole meet has also played a hand in the market’s volatility. Hopes are that the Fed announces stimulus measures to jumpstart the US economy, which, by the trickle down effect, will benefit the Indian market.

Back home, deficit monsoon, high interest rates and poor investment climate continue to bog down the sentiment. Furthermore, Parliament has hit a dead-end due because of the furore over the CAG report. This in turn intensifies the worries of a policy paralysis in the country.

Amidst all the negativity, however, portfolio manager PN Vijay says that fundamentals are improving for the Indian market. Therefore, he expects September to be a relatively good month for equities. "There is nothing wrong with equity markets, and Indian valuations definitely look cheaper. Some sort of incidental fall can take the market briefly down for one or two days, but I think that's about it," he said in an interview to CNBC-TV18.

On the other hand, Mithil Pradhan of Violet Arch Capital Advisors says that an expiry below 5.300 means that the market could trade below that level the next month. "But with more or less to worry about, we might just end between 5300-5360 sort of levels," said Pradhan.