How much more can the markets fall?

Falling for the seventh consecutive session, the benchmark indices – the S&P BSE Sensex and the CNX Nifty – lost over 2% each on Thursday, registering their second-worst fall this year, as Saudi Arabia launched air strikes on Yemen. The air strike sent crude prices up around 6%.

Also impacting the domestic market was the futures & options (F&O) expiry for the March series that saw investors place cautious bets on the markets ahead of the corporate results season in April.

From its all-time high of 30024.74 on 04 March 2015, the S&P BSE Sensex has corrected 2,567.16 points, or 8.6%, till Thursday. The CNX Nifty, on the other hand, has lost 777 points, or 8.5%, from its 52-week high level of 9,119.20.

On Friday, the benchmarks opened 0.5% each with the CNX Nifty at 8,367 levels and the S&P BSE Sensex at 27,546 levels.

So, is this a temporary bounce back given the steep correction seen over the past few weeks and what are the key levels one should keep an eye on? Here is what the experts say:

FUNDAMENTAL VIEW

U R Bhat, managing director, Dalton Capital Advisors

The fall seen on Thursday has largely been on account of developments in West Asia. I think the oil prices that jumped sharply now seem to have stabilised and worries regarding the spike in oil prices have somewhat abated. I expect the markets to stage a partial recovery. Having said that, however, there can be some overhang on account of Greece, which makes another payment to the International Monetary Fund (IMF) on 9 April. For the Nifty, 8350 is a very important support level. Is this is breached on the downside, the next support comes in around 8,150 levels.


Mayuresh Joshi, vice – president (institutional), Angel Broking

Whatever happened in Yemen saw a rude reaction from the markets.  The March series F&O expiry also played on the sentiment. The markets, in my opinion, are expecting weak March quarter earnings to come through and are already factoring in a lot of pessimism on this front. They would probably now want to see the sectors and stocks that under-perform and out-perform this weak expectation. For the Nifty, the 8,000 is a key level to watch out for now.

One should wait for the earnings season to start and the markets to react before taking a fresh investment call. Any major disappointment as regards corporate earnings, a sharp spike in crude oil prices and the dollar strength are three factors that can take the Nifty below 8,000 levels. Investors should have a stock specific approach now.


TECHNICAL VIEW

Jayant Manglik, president – retail distribution, Religare Securities

Geopolitical tension in Middle East triggered selling pressure across the globe and domestic benchmarks lost over 2% on F&O expiry day. The CNX Nifty index slipped below its crucial support of 100-EMA (Exponential Moving Average) in early trade. In the absence of any major event on domestic front, global cues would dictate the market trend ahead. Participants’ should maintain a cautious approach around current levels and keep a close watch on global markets for further cues. Now, the next crucial support exist around 8,300 for the Nifty and in case of any technical rebound, 8,470 would act as hurdle

Angel Broking

Going forward, considering the ongoing momentum, we expect the Nifty to extend this correction towards 8,280 – 8,250 levels. However, a minor bounce back from this mentioned support zone cannot be ruled out. On the flipside, 8400 – 8470 are seen as immediate resistance levels for the index.

Anand Rathi Research

The S&P BSE Sensex index needs to move back above 28,000 levels to bounce back towards 28,250 and 28,500 levels while on the downside, holding below 27,500 may drag the index towards 27,250 and 27,000 levels. As regards the CNX Nifty, till it doesn’t move above 8,450 levels, weakness may again drag it to 8,300 to 8,250 levels. Traders need to be cautious till the index doesn’t negate its short term negative trend of making lower lows.

Nifty Futures

niftyfutures.org@imediaone.com

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