Monday, August 24, 2015
Will the BSE Sensex slide below 15,000 points?
So, will the BSE Sensex slide below the 15,000 points mark again? It seems so as far as the trend in the last one month is anything to go by.
Last week ended Friday, the Bombay Stock Exchange (BSE) benchmark index, the Sensex, slid for the fourth consecutive week to fall to almost 16,000 points, closing at 16,141.67 points, as fears of a slowdown in the wake of the recent US crisis took a toll on not only Indian and Asian bourses but also world markets.
The Sensex began higher (last week) at 17,015.99 points but later fell below 16,000 points to 15,987.77 points and ended at 16,141.67 points, a fall of 697.96 points or 4.14 per cent, from the previous week’s close.
The NSE 50-share Nifty also plunged 227.30 points to end last week at an over one-year-three-month low (at 4,845 points).
The American downgrade by S&P has made foreign institutional investors or FIIs wary of the global markets. As a result, a kneejerk reaction was felt on the Indian bourses with FIIs withdrawing Rs 2,000 crore last week itself. This month, FII withdrawal surpassed Rs 7,600 crore (till last weekend).
But if lessons are to be learnt from the previous global meltdown, FIIs should bet on India and emerging markets like China and Brazil rather than countries in the West like the US.
For instance, India almost remained impervious to the global meltdown of 2008 even though we saw some jobs being lost, and this time also, India has resisted this initial jolt (after the US downgrade).
The recent economic data, which was released by the US, paints a gloomy picture on the prospects of the global economy in the medium term and even Europe is set to sink in this crisis.
The domestic scenario isn’t too good either. Surging inflation and interest rates have taken a toll on the market as fears loomed that corporate profits could be dented.
So, with the upcoming festive season, there could be a temporary revival, and the Sensex could turn robust and scale the 18,500 points mark.
But with the overall gloom in the global markets remaining, the stock markets aren’t going to do too well this year end.
The BSE Small-cap index was the biggest loser among indices last weekend, sliding 8.09 per cent. The Mid-cap fell 5.93 per cent.
Selling was witnessed in all sectors, with indices tanking between 0.25 per cent and 7 per cent. IT firms have been dented heavily owing to the US crisis.
Even slump in the real estate sector continued owing to the Greater Noida crisis, where farmers are seeking their land back from the Noida Development Authority.
The farmers had handed over their land to the authority, which, in turn, sold the plots to builders to make high rises. Here, the fate of 50,000 home buyers is at stake.
This could have a domino effect on the entire country, if such a revolt is replicated elsewhere. Also, bank and auto stocks were hit.
Sensex stocks like RIL, Infosys, SBI, Tata Motors, ICICI Bank, Tata Steel, Jindal Steel, Sterlite, Wipro, Hindalco and Tata Power fell to their 52-week lows. But as they are scrips of rock-solid companies, these stocks are the ideal buys now.
Now, if you plan to sell stocks and hope to make a handsome profit, you may have to wait till the Union Budget or the last quarter of the financial year (around February-March 2012) as the government may try to roll out a popular Budget in a bid to avoid a drubbing in the forthcoming Lok Sabha elections.
But if a full-blown crisis (like the 2008 meltdown) occurs, the wait (to sell stocks) could even be longer and the Sensex may fall well below the 15,000 points mark in such a scenario.
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