11/02/2016

BloodbathonDStreet:FivereasonswhySensexslumpedbyover800pointsTheEconomicTimes

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BloodbathonDStreet:FivereasonswhySensexslumped
byover800points
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ByECONOMICTIMES.COM|11Feb,2016,03.12PMIST

NEWDELHI:TheS&PBSESensexplungedover800pointsinafternoontradeon
Thursdaytohititsfresh52weeklowof23,057.36,ledbylossesinrealty,power,bank,
capitalgoods,consumerdurable,andmetalstocks.

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TheNifty50cameunderpressureinthelast11/2houroftrade,fallingover200pointsto
registeritsfresh52weeklowof7,003.75atthetimeoffilingofthereport.
(Forminutebyminutemarket/stockupdates,followourTwitterhandle@ETMarkets)
IfoneweretogobythebuzzonDalalStreet,hereiswhythemarkethascrashed.
Niftyfallsbelow7,000Sensexbreaks23,000mark

Bearhugtechnicalfactors:Thebenchmarkindicesaretradingwellbelowtheirsupport
levels.But,analystseefurtherdeclineinmarketswhichcouldtakeNifty50towards6,700
6,800levels.TheNifty50appearstobeinthelastlegofsecondcorrectivestructurewhichis
inprogresssinceAugust2015,sayexperts.
InvestorscanlookatgoinglongifNifty50fallstowards67006800levels,becausethatis
whereaneartermbottomisplaced.
"Basedonconventionaltechnicalanalysis,onlongtermcharts,strongsupportsareplaced
around6700levelswhereweexpectmarketstobottomout.Longtermstructurebasedon
wavecountsisstillbullishlypoisedandhencewearecomfortableincreatinglongpositions
around6700levels,"saidMazharMohammad,ChiefStrategistTechnicalResearch&
TradingAdvisory,Chartviewindia.in
"Rightnow,forNiftythislookslikeaworstcasescenariowheremarketsshouldbottomout.
However,onmediumtermchartsreasonablesupportlevelsareplacedinthezoneof7097
6875,"headded.

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USFedcommentary:ThecommentaryfromUSFederalReserveJanetYellenissomethingwhichmighthavecaughtinvestorsby
surprise.Mostexpertswerepencillinginaratehikeby2017amidslowdowninglobalgrowth,glutincrude,andChinajitters.
FederalReserveChairJanetYellentestifiedbeforetheHouseFinancialServicesCommitteeWednesday.ShesaidthattheFederal
Reserveisunlikelytoreverseitsplantoraiseinterestratesfurtherthisyear.
However,shehighlightedinherstatementthatvolatilefinancialmarketsacrosstheglobe,tighterliquidityanduncertaintyoverChinese
economicgrowthhaveraisedriskstotheU.S.economy.
"ThiswasacredibleretracementinourviewandIthinkthatthetwopointsweshouldkeepinmindwasthatJanetYellenquite
expressivelysaidthattheturmoilinthefinancialmarketsaswellaswhatisgoingoninChinadoesthreatenthegrowthoutlookforthe
US,"saidSanjayMathur,SeniorEconomist,RBS.
"Thesecondpointshesaidwasthatfearsofeconomicslowdownarenotfeedingintoassetpricesandtosomeextentsheistryingto
pointtothefactthatnegativewealthaffectscouldhaveabearingontheeconomy,"headded.
"Netnetwhenwelookatit,itisgettinghardandharderfortheFedtojointhefourdotsthattheyhadsortofpredictedinDecemberand
youcanseethatinthemarketaswell,"saidMathur.
Fallincrudeoilprices:CrudeoilpriceshavebeeninadownwardspiralsinceJulyof2014.ThebenchmarkBrentcrudepricesin
Londonhavecrashedfrom$106inJuly,2014to$30today,adropofover70percent.

http://economictimes.indiatimes.com/markets/stocks/news/bloodbathondstreetfivereasonswhysensexslumpedbyover800points/articleshow/509

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11/02/2016

BloodbathonDStreet:FivereasonswhySensexslumpedbyover800pointsTheEconomicTimes

UScrudetumbledbelow$27abarrelinAsiatodayastheoversaturatedmarketstruggledtocopewithhighinventoriesintheUnited
StatesandanincreasedoutputfromOpec,saidamediareport.BrentcrudeforAprilfellto$30.52abarrel
ThedeclinecamedespitetheweeklyUSDepartmentofEnergyreportshowingUSoilstocksfellabout800,000barrelsfortheweek
endingFebruary5,withtradersseeinginventoriesstillathighlevels.
"Whatweareexperiencingintheglobalmarketislargeramountofpressurecomingupfromtheredemptionandthisredemptionpressure
isduetothecollateraldamageaidedbyfallincrudeandcommodityprices,"saidDevenChoksey,MD,KRChokseyInvestment
Managers.
"IfthispressuresubsidesandifthispressurecomesdownthenIdonotthinkthatthemarketwouldgodowninhurryorprobablygodown
badly,"headded.
RiseinNPAleadsspooksbanks:Thefallintheindexwasledlargelybybankingsector.MostofthePSUbankshavereportedover40
percentjumpinprovisionsrequirement.Asmuchas85percentofthebankingsystem'sweakassetsareinthebooksofpublicsector
banks(PSBs).Increasingstressisalsovisibleinthequantumofstrategicdebtrestructuringand5/25structuringbeingcarriedoutby
banks.
Crisilbelievesintensifyingassetqualityproblemsatpublicsectorbanks(PSBs)havethepotentialtoimpairtheircreditriskprofilesand
necessitatesignificantlyhighercapitalisationofPSBseitherthroughgovernmentinfusionorrelaxationofregulatorycapitalnorms.
"Overthepast18months,Crisilhaseitherdowngradedorreviseditsoutlookto'Negative'onnineoutofthe25PSBsthatitratesonthe
backofexpectationsofworseningassetquality,"saidthereport.
Disappointingearnings:DecemberquarterresultsforIndiaInchavefailedtoimpressDalalStreetatlargeandifearningsdon'tpickup
thereisnocaseofabullmarket,sayexperts."Bullmarketsnormallycomewithearningsgrowth.Butifthisisabullmarketcorrection,
thenthisisthefirstbullmarketwhichisnotcomingwithearningsgrowth,"saidSridharSivaram,InvestorDirector,EnamHoldings.
"Allbullmarketscomewithearningsgrowth.Bullmarketsnormallycomewithearningsgrowth.But,thishastobetheonlybullmarket
whichcomeswithearningssortofdowngradesthroughout,"headded.Thishastobetheonlybullmarketifthisisabullmarketwhich
comeswithearningssortofdowngradesthroughout.
IfglobaleconomyisgoingthroughastructuralchangeIndiaInc.mightnotbeabletopickthepaceasforecastedbyvariousanalysts.The
marketdoeslookattractiveatcurrentlevels,butwithnoearningsgrowth,marketswillnotpickpace.SivaramisoftheviewthatIdon'tsee
earningscomingbackinahurry.Thenextyearconsensusnumberevennowiscloserto18%,andIcannotseethathappening."Wewill
closeto10%,"headded.
"Wewillcontinuetoseeearningsdowngrade.Wecouldhaveanothersharpcorrectionfromcurrentlevels,andIdonotseethemarkets
movingsubstantiallyupformhere,"headded.
StayontopofbusinessnewswithTheEconomicTimesApp.DownloaditNow!

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http://economictimes.indiatimes.com/markets/stocks/news/bloodbathondstreetfivereasonswhysensexslumpedbyover800points/articleshow/509

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