Sensex tanks by over 400 points

Sensex tanks by over 400 points


UMBAI: Benchmarks were under intense selling pressure on Wednesday breached 200 Daily Moving Average as sentiments in global markets turned bearish after Germany banned short-selling in some government bonds and stocks.

At 2:28 pm, Bombay Stock Exchange’s Sensex was at 16454.75, down 421.01 points or 2.49 per cent. The index hit intraday low of 16414.65 and high of 16802.39.

National Stock Exchange’s Nifty was at 4940.60, down 125.60 points or 2.48 per cent. The index touched intraday low of 4919.45 and high of 5065.10.

The index has breached its 200 DMA of 4988. This is the second time in the week that the index has tested its crucial support levels. According to analysts, the concern will begin if the index closes below 200 DMA for at least two consecutive sessions which may trigger more short positions.

BSE Midcap Index was down 2.07 per cent and BSE Smallcap Index slipped 1.97 per cent lower.

All the sectoral indices were in the red. BSE Metal Index fell 3.70 per cent, BSE Realty Index tumbled 3.69 per cent and BSE Bankex slipped 3.52 per cent.

Sterlite Industries (-6.76%), Tata Motors (-5.80%), ICICI Bank (-5.62%), Jaiprakash Associates (-5.29%) and M&M (-5.28%) were amongst the major Sensex losers.

Hero Honda (0.86%), was the lone index gainer.

Market breadth was negative on the BSE with 1110 losers against 189 gainers.

Meanwhile, the European shares were in deep red by losses in the financials. FTSE 100 was down 2.62 per cent, CAC 40 fell 3.01 per cent and DAX fell 2.81 per cent.


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Bluechips below 200DMA: To buy or not to buy

MUMBAI: Stocks have been under pressure for some time now due to fundamental reasons pertaining to their respective sectors as well as due to economic uncertainties in the global markets. On Monday, traders heaved a sigh of relief as the Nifty bounced back after briefly slipping below its 200-Daily Moving Average of 4980. Index heavyweights like Reliance Industries and ONGC, which pulled the Nifty down, too have slipped below their 200-DMA. The 200-DMA is a historical tool and indices or prices don’t breach this level on the downside very often. If the price stays above 200-DMA, it’s a bullish sign, whereas a move below it signals a bearish sentiment. “Given global concerns, most of the stocks have underperformed for good reason and should be left out. Weakness in index heavyweight Reliance Industries appears as a precursor to some correction in coming days. If the market stays below 5000 levels then we might see 4600 on the Nifty,” said Sandeep J Shah, CEO, Sampriti Capital. List of the biggies that are significantly below their 200 DMA Sr. no Stock CMP (Rs) 200 DMA(Rs) - % 1 Reliance Communications 145 203.04 28.6 2 DLF 289.3 362.22 20.1 3 Suzlon Energy 63.95 81.11 21.2 4 Bharti Airtel 267.95 334.07 19.8 5 Jaiprakash Associates 127.7 149.18 14.4 6 Maruti 1242.45 1447.4 14.2 7 Unitech 76.25 85.79 11.1 8 Sterlite Industries 688.25 784.89 12.3 9 ONGC 1051.35 1136.69 7.51 10 Reliance Industries 1020.6 1043.49 2.19 11 NTPC 205.15 210.7 2.63 Note: Closing figures as on 19-05-2010 The stocks may have fallen temporarily and look bearish on the charts. However, they can be picked up at current levels for the long-term period of over a year. “Investors can enter these stocks at current levels for a holding period of minimum one year. Investors can put 25% of the funds at these levels and wait to accumulate at lower levels,” said Ajay Parmar, head of research at Emkay Global Financial Services.

More @ Bluechips below 200DMA: To buy or not to buy

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Indian shares may fall as much as 10%

Indian shares may fall as much as 10%

MUMBAI: The dream run of emerging market stocks may be coming to an end, with risk-averse global investors pulling out funds as the world stares at the spectre of sinking back to economic contraction with troubles brewing in Europe and China.

International investors have pulled out $890 million from India this month, the highest since January 2009 following the collapse of Lehman Brothers, in what could just be the beginning if global economic problems persist.

Shaky markets and the possibility of policy actions such as interest rate hikes to stave off inflationary threats may be a drag on emerging stocks for some months to come. Indian shares may fall as much as 10%, say investors.

“Emerging markets have had a great run, but now investors are taking a breather,” said Jyotivardhan Jaipuria, managing director and head-India research at BoA Merrill Lynch. “Our fund manager survey indicates that they have become more cautious about investing in emerging markets.”

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→ US treasuries safer bet in uncertain times

→ Indian equities 2nd best in returns after Indonesia: ADB

→ Global recovery takes a hit as euro, China weigh on Street

The MSCI Emerging Markets index is down about 9% from last month’s highs and China is down more than 20%. Indian stocks are down 6.5% from their peak, after climbing 81% in 2009.

International markets have been see-sawing as some believe the $1-trillion European Union aid package to save economically troubled nations such as Greece and Spain may not be enough to prevent another credit crisis. Rising fears about China’s growth faltering due to government attempts to cool down the economy have exacerbated investor concerns.

“The European crisis will impact India flows negatively in the near term as risk taking gets cut back,’’ said Pankaj Vaish, managing director and head-equities at Nomura.

Emerging market equity funds had a second straight week of redemptions, according to EPFR data for week ended May 12.

China equity funds posted their second straight week of outflows. Emerging Europe, Middle-East and Africa funds also lost $350 million. As investors flee to safe-haven assets such as the US treasury and gold, Indian stocks could fall further, investors say.

“There could be continued short-term selling in emerging markets and Indian equities. Markets could fall another 5-10% from these levels,” said Sam Mahtani, director, emerging market equities, at F&C Asset Management. “There will be no upmove till such time fears recede over global issues.’’

US assets such as the treasury, shares and gold are preferred as they are seen as safe, at least for now. Shares in the US are up 2% this year. The US dollar has once again emerged as a safe-haven asset even for central banks. Central banks across the globe raised their holdings to $2.7 trillion in March, from $2.67 trillion in February. Gold prices are near record highs.

Emerging market growth, which has been higher than the developed world in the last decade, is also under threat given that most central banks are poised to raise interest rates to temper inflation. China’s inflation rate may touch 3% soon, prompting a rate increase, and in India it is already above the central bank’s target.

“Systemic risk has reduced for the moment but investors know it has not vanished,” said Munish Varma, head-global markets India at Deutsche Bank. "That has prompted investors to liquidate some of their risky holdings and move into safer assets as seen from the demand for US treasuries last week and record high price of gold.”



Top 5 picks I Mid-term picks I Stocks that present good buying opportunity





Src: ET