Ashwani Gujral of ashwanigujral.com believes once everybody is done selling only then the market will stop falling -- it is now not a question of levels because if this selling continues for a month and half, then one can only imagine the levels which will come in. Bears are in total control because the bulls don't have any clarification on what sales and profits the companies will make. There is zero conviction on buying and it shows that large players are getting out; this is not retail leaving the market.
“Nobody should be brave to buy thinking you are buying at great valuation - wait for the market to stop falling, “ says Gujral, adding that don’t go by support levels because they will not hold.
Ajay Srivastava of Dimensions Corporate Financial Services agrees with Gujral and says there is nothing positive in the market now.
According to him when you squeeze 86 percent of the liquidity there is no urge for people to go out and buy, says Srivastava. Moreover, real estate coming to a standstill is not a great achievement; it’s more of a disaster, he says.
The demonetisation issue needs to be looked at closely because instead of the government taking a more constructive approach to release more liquidity, what we are seeing is lot more politicisation, lot more vehemence from say Income Tax Department with regards to notices etc. So instead of offering palliatives for a disastrous situation, it is becoming a confrontational political situation and that is never good for market.
“We need soothing words from the government on how they will get liquidity up, revive market, give confidence to people,” says Srivastava.
Gujral also expects the Bank Nifty to go lower than the 200 day moving average because Nifty is already below that – also if nothing is going well in the economy then banks will get affected. People are having silly notion that banks will now have enough liquidity, so NPAs will be written off and will have more to lend etc – all this is not a correct assessment.
However, from market perspective it is not impossible to make money - one can have very good days by going short on market, says Gujral. He advises people to hedge portfolios, buy Puts and have a fairly good ride on the downside as well. So play on the downside.
Amisha Vora, Join Managing Director, Prabhudas Lilladhar says, foreign institutional investors have been hedging or selling and domestically, there are two set of buyers – one insurance companies are net buyers but mutual funds are not buying.
According to her, till Q3 numbers are out on profit and sales, the mood in market will remain extremely somber and in that scenario, levels of 7500-7400 on Nifty are not impossible to come by.
One also needs to be more clarity on where dollar is heading which a key reason is hurting emerging markets.
Nobody currently has the exact handle of how much it is damaging the sales etc, says Vora.
According to her, only an interest rate cut will not bring back the comfort of buying, sentiment needs to turn positive. Moreover, even though GST would be extremely good for the long-term, in the short-term there could have a lot of teething trouble.
So, it looks like the market is currently focusing on transitional pains, than macro gains of these reforms, says Vora.
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