Weaker-than-expected US factory data soured global investor sentiments, which triggered a sell off in the US equities on Monday. US manufacturing grew at a slower pace in January as new order growth plunged by the most in 33 years, while spending on construction projects barely rose in December. Weak global cues spooked Indian market dragging the Nifty below 6,000 in early morning trade today, its lowest level since October 9. The Sensex also opened below its 200 daily moving average.
Overall market set-up continues to remain very weak, so there is high chance of the Nifty breaching 5,700 level soon, cautioned Gautam Shah of JM Financial. In an interview to CNBC-TV18, he said the key level to watch out for on the downside would be 5,810. According to him, the break down seen in export-oriented IT, metal sector is a concern.
Also Read: Emerging markets outlook not rosy, but valuations tempt
On the upside, any rebound seen in the Nifty will be restricted to 6,100-6,150.
When asked if the mayhem seen in global markets is likely to continue, he said the Dow could head towards 14700 and the S&P is likely to slip to 1680 given the weak sentiments. From the EM basket, he sees another 10-12 percent correction in the Chinese market.
On the other hand, Rakesh Arora of Macquarie Capital is making the most of the blood on the street. He recommends investors to buy the market at current levels and hold IT, pharma and metals. Infact, one can add fresh positions in these sectors on dips, he said. From the banking space, he is betting on L&T, ICICI Bank and Axis Bank.
Arora is of the view that the reaction seen in the market post poor US data is overdone. He doesn’t see the Nifty correcting beyond 4-5 percent from here on. Further, he added that the global markets are under going a risk off trade.
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