MUMBAI: This could well be an edgy weekend. While short-covering and buying of battered frontline shares helped prop up the Sensex on Friday, Monday could be another day. A few hours after the market closed in the positive territory — up around 400 points, or 2.6%, after Thursday’s 5% drop — traders came to know that Wall Street investment bank, Bear Stearns, was in trouble and full-blown salvage operations was under way with JP Morgan and New York’s Federal Bank trying bail it out.
The US market slipped soon after it opened and brokers feared that its impact will stay till Monday. According to Seshadri Bharathan, director at the brokerage Dawnay Day AV Securities, “There could be more subprime skeletons, and hence, there is more pain left in the market. It’s expected to go down on Monday.”
Hedge funds are reeling under the impact of the US credit crisis and the unwinding of yen-carry trade — a transaction where large investors borrow at low interest in yen to buy stocks across markets — has aggravated the situation. This event assumes significance to Indian investors as several investment banks and hedge funds have been liquidating their stock positions in emerging markets, including India, to offset losses in the credit markets.
The US markets opened lower on Friday after the Bear Stearns news, ignoring the unexpectedly soft US inflation data, something which was expected to give the Federal Reserve more headroom to cut rates on Tuesday. At the time of going to the press, the Dow had fallen roughly 1%.
Back home, the BSE’s 30-share Sensex closed at 15,760.52, up 403.17 points. NSE’s 50-share Nifty ended at 4,745.80, up 122.2 points or 2.64%. But the positive trend in frontline shares did not rub-off on the broader market, with losers beating gainers 1,458:1,214 on BSE.
While there was little to cheer from the latest domestic inflation data, which rose to a nine-month high at 5.11%, investors perceived the lower-than-expected foreign institutional sales figures for Thursday as an indication of limited downsides in coming sessions. On Thursday, FIIs sold Indian shares worth Rs 108 crore, when benchmark indices fell 5%.
As per provisional data, FIIs on Friday have sold around Rs 358 crore in India while domestic institutions were net buyers of Rs 100 crore.
Some fund managers and analysts are advising investors to buy with a long-term perspective. “This is a good time to buy, especially when the sentiment is nervous. There could not be more than a 1,000-point fall at the most. So, rather than chickening out, one could look at several shares available cheap,” said ING Investment Management CIO (equities) Paras Adenwala.
Deutsche Bank lowered its target for the Sensex to 18,000 by March 2009 from the earlier 23,000 by December 2008, says an agency report.
Elsewhere in Asia on Friday, Japan’s Nikkei and Topix fell 1.6% and 1.8%, respectively. Hong Kong’s Hang Seng declined 0.3% while Singapore Straits Index rose 1.2%.
The US market slipped soon after it opened and brokers feared that its impact will stay till Monday. According to Seshadri Bharathan, director at the brokerage Dawnay Day AV Securities, “There could be more subprime skeletons, and hence, there is more pain left in the market. It’s expected to go down on Monday.”
Hedge funds are reeling under the impact of the US credit crisis and the unwinding of yen-carry trade — a transaction where large investors borrow at low interest in yen to buy stocks across markets — has aggravated the situation. This event assumes significance to Indian investors as several investment banks and hedge funds have been liquidating their stock positions in emerging markets, including India, to offset losses in the credit markets.
The US markets opened lower on Friday after the Bear Stearns news, ignoring the unexpectedly soft US inflation data, something which was expected to give the Federal Reserve more headroom to cut rates on Tuesday. At the time of going to the press, the Dow had fallen roughly 1%.
Back home, the BSE’s 30-share Sensex closed at 15,760.52, up 403.17 points. NSE’s 50-share Nifty ended at 4,745.80, up 122.2 points or 2.64%. But the positive trend in frontline shares did not rub-off on the broader market, with losers beating gainers 1,458:1,214 on BSE.
While there was little to cheer from the latest domestic inflation data, which rose to a nine-month high at 5.11%, investors perceived the lower-than-expected foreign institutional sales figures for Thursday as an indication of limited downsides in coming sessions. On Thursday, FIIs sold Indian shares worth Rs 108 crore, when benchmark indices fell 5%.
As per provisional data, FIIs on Friday have sold around Rs 358 crore in India while domestic institutions were net buyers of Rs 100 crore.
Some fund managers and analysts are advising investors to buy with a long-term perspective. “This is a good time to buy, especially when the sentiment is nervous. There could not be more than a 1,000-point fall at the most. So, rather than chickening out, one could look at several shares available cheap,” said ING Investment Management CIO (equities) Paras Adenwala.
Deutsche Bank lowered its target for the Sensex to 18,000 by March 2009 from the earlier 23,000 by December 2008, says an agency report.
Elsewhere in Asia on Friday, Japan’s Nikkei and Topix fell 1.6% and 1.8%, respectively. Hong Kong’s Hang Seng declined 0.3% while Singapore Straits Index rose 1.2%.
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