MUMBAI: It’s been a bad week for the bulls, and it got worse on Friday. The day India’s biggest IPO closed with a record response, Dalal Street was gripped with anxiety.
Retail investors faced margin calls, foreign portfolio managers continued to sell and the Sensex was unimpressed by the mild recovery in Asian markets. Suddenly, a combine of factors thwarted operators’ efforts to prop up the market. As a trader summed it up after a rollercoaster day, ‘Saare zamin par’ .
While the US economy’s woes soured sentiments, with FIIs selling Rs 10,300 crore since January 1 and Rs 2,146 crore on Friday, the manner in which stocks fell also seems to indicate that there are local factors at work too.
Traders and investors alike are paying for the gluttony of December and early January, when they loaded up on shares in the belief that the domestic consumption story was a bulletproof jacket against the turbulence in world markets.
On Friday, as the Sensex slipped 687.12 points to close at 19013.7, there was also talk that Citigroup which had suffered a huge write down in assets a few days ago, has been heavily unwinding its positions in frontline stocks.
Some of the foreign players take positions in Indian markets as a hedge against derivative contracts that are issued to investors abroad. There were more bad news from abroad: New Star Asset management Group, an international fund, lost a quarter of its market value on Friday.
In the local market some of the banks trimmed their direct investment and made margin calls on investors who had borrowed against shares. Market breadth on the BSE was overwhelmingly bearish, with more than 7 stocks declining for every one that rose. The triggers to watch now are:
Fed rate cut and US government’s fiscal sops.
Subprime hits by other Wall Street players (remember, losses and writeoffs are more in banks with a change of guard).
▪ Listing premium of IPOs and retail participation once they get the refund.
▪ A softening of interest stance by RBI
Some of these factors may improve sentiments a little in the coming weeks, but brokers fear a further unwinding of leveraged positions. On Friday Indian shares extended losses to the fifth consecutive session. Midcap and smallcap shares, the leading lights of the latest round of upswing, were pummelled as investors stampeded for the exit all at once. The BSE Midcap and Smallcap indices were down nearly 5%.
Market watchers feel the sell-off will spread as investors try to offset losses in one stock by booking profits where they can. In the Sensex, stocks like Reliance Industries, ICICI Bank, DLF and NTPC were down 6-7%. Ranbaxy was the best performer, gaining 5%.
Retail investors faced margin calls, foreign portfolio managers continued to sell and the Sensex was unimpressed by the mild recovery in Asian markets. Suddenly, a combine of factors thwarted operators’ efforts to prop up the market. As a trader summed it up after a rollercoaster day, ‘Saare zamin par’ .
While the US economy’s woes soured sentiments, with FIIs selling Rs 10,300 crore since January 1 and Rs 2,146 crore on Friday, the manner in which stocks fell also seems to indicate that there are local factors at work too.
Traders and investors alike are paying for the gluttony of December and early January, when they loaded up on shares in the belief that the domestic consumption story was a bulletproof jacket against the turbulence in world markets.
On Friday, as the Sensex slipped 687.12 points to close at 19013.7, there was also talk that Citigroup which had suffered a huge write down in assets a few days ago, has been heavily unwinding its positions in frontline stocks.
Some of the foreign players take positions in Indian markets as a hedge against derivative contracts that are issued to investors abroad. There were more bad news from abroad: New Star Asset management Group, an international fund, lost a quarter of its market value on Friday.
In the local market some of the banks trimmed their direct investment and made margin calls on investors who had borrowed against shares. Market breadth on the BSE was overwhelmingly bearish, with more than 7 stocks declining for every one that rose. The triggers to watch now are:
Fed rate cut and US government’s fiscal sops.
Subprime hits by other Wall Street players (remember, losses and writeoffs are more in banks with a change of guard).
▪ Listing premium of IPOs and retail participation once they get the refund.
▪ A softening of interest stance by RBI
Some of these factors may improve sentiments a little in the coming weeks, but brokers fear a further unwinding of leveraged positions. On Friday Indian shares extended losses to the fifth consecutive session. Midcap and smallcap shares, the leading lights of the latest round of upswing, were pummelled as investors stampeded for the exit all at once. The BSE Midcap and Smallcap indices were down nearly 5%.
Market watchers feel the sell-off will spread as investors try to offset losses in one stock by booking profits where they can. In the Sensex, stocks like Reliance Industries, ICICI Bank, DLF and NTPC were down 6-7%. Ranbaxy was the best performer, gaining 5%.
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