Till some months ago, the Indian market just needed a whiff of good news to vault a couple of hundred points. On the other hand, it would take loads of negative news to bring the market down. That seems to have reversed.
You need oodles of good news to keep the market up, and just a sprinkling of bad news to pull it down. That could explain why Indian shares closed with relatively modest gains on Wednesday, despite the euphoric mood in world markets.
Much before the Indian markets opened on Wednesday, the Dow had gained nearly 400 points, or more than 3%, over investors belief that the credit crisis was nearing its fag end. The Asian markets responded positively, with the Nikkei gaining more than 4%, or 533 points, and Hang Seng up 3.18% or 735 points.
However, the day had its share of bearish news with the International Monetary Fund (IMF) cutting its forecast for global growth this year. The international organisation feels that there is a 25% chance of a world recession and that the world economy will grow at 3.7% in 2008, the slowest pace since 2002. Reports also say IMF has lowered its forecast for US economic growth to 0.5% this year, below the 1.5% prediction made in January.
While the benchmark Sensex was up more than 600 points during the morning session, weakness was clearly visible as the day progressed. Index constituents like TCS, HDFC, Infosys Technologies, ICICI Bank, ACC and SBI came off their intra-day highs in the absence of fresh buying, thereby pulling down the Sensex.
The 30-share index touched a high of 16,236.70 during the day, but closed at 15,750.40, a gain of 123.78 points. The 50-share Nifty settled the day at 4,754.20, up 14.65 points. However, overall market breadth was robust with gainers outnumbering losers 2:1
Dealers say rising inflation has further undermined sentiment in the market, as the government’s measures could hurt growth even though inflation may be tamed. Goldman Sachs’ latest report says the current surge in inflation is not temporary. Goldman Sachs has increased its inflation forecast to 6.5% over the next six months. It will come down gradually to 5% by the end of FY09 due to a falling output gap and further policy action, adds the report.
Volumes continued to be on the lower side, with quite a few arbitrageurs staying away from the market. The combined cash market turnover at Rs 16,154.48 was only slightly higher than Tuesday’s figure. Provisional figures showed that FIIs were net sellers at Rs 135.65 crore. However, domestic financial institutions net bought stocks. “We are still not completely out of the woods,” said an institutional sales head of a domestic brokerage.
“Some amount of weakness is still clearly visible and the market is bound to face resistance on every rise,” he added.
You need oodles of good news to keep the market up, and just a sprinkling of bad news to pull it down. That could explain why Indian shares closed with relatively modest gains on Wednesday, despite the euphoric mood in world markets.
Much before the Indian markets opened on Wednesday, the Dow had gained nearly 400 points, or more than 3%, over investors belief that the credit crisis was nearing its fag end. The Asian markets responded positively, with the Nikkei gaining more than 4%, or 533 points, and Hang Seng up 3.18% or 735 points.
However, the day had its share of bearish news with the International Monetary Fund (IMF) cutting its forecast for global growth this year. The international organisation feels that there is a 25% chance of a world recession and that the world economy will grow at 3.7% in 2008, the slowest pace since 2002. Reports also say IMF has lowered its forecast for US economic growth to 0.5% this year, below the 1.5% prediction made in January.
While the benchmark Sensex was up more than 600 points during the morning session, weakness was clearly visible as the day progressed. Index constituents like TCS, HDFC, Infosys Technologies, ICICI Bank, ACC and SBI came off their intra-day highs in the absence of fresh buying, thereby pulling down the Sensex.
The 30-share index touched a high of 16,236.70 during the day, but closed at 15,750.40, a gain of 123.78 points. The 50-share Nifty settled the day at 4,754.20, up 14.65 points. However, overall market breadth was robust with gainers outnumbering losers 2:1
Dealers say rising inflation has further undermined sentiment in the market, as the government’s measures could hurt growth even though inflation may be tamed. Goldman Sachs’ latest report says the current surge in inflation is not temporary. Goldman Sachs has increased its inflation forecast to 6.5% over the next six months. It will come down gradually to 5% by the end of FY09 due to a falling output gap and further policy action, adds the report.
Volumes continued to be on the lower side, with quite a few arbitrageurs staying away from the market. The combined cash market turnover at Rs 16,154.48 was only slightly higher than Tuesday’s figure. Provisional figures showed that FIIs were net sellers at Rs 135.65 crore. However, domestic financial institutions net bought stocks. “We are still not completely out of the woods,” said an institutional sales head of a domestic brokerage.
“Some amount of weakness is still clearly visible and the market is bound to face resistance on every rise,” he added.
No comments:
Post a Comment