In tandem with global markets, the benchmark Sensex today nosedived by over 424 points even as investors globally awaited the US government's proposed 700 billion-dollar rescue plan, considered mother of all bailouts.The Bombay Stock Exchange barometer closed the day at 13,570.31 points, a steep fall of 424.65 points or 3.03 per cent over last close, with IT stocks index, widely anticipated to be one of biggest Indian causalities of the US credit crisis, taking the biggest hit of 5.07 per cent among all sectoral indices. National Stock Exchange's 50-share Nifty closed the day 2.28 per cent lower at 4126.90 and September futures premium fell from 12 points to 8 points.
Stocks of financial companies and commodity producers fell in Europe and Asia markets on concerns a global recession cannot be ruled out despite US government’s plan to buy bad assets of banks.
Overall sentiments are negative as recessional fears are making players edgy. Add to that the F&O expiry. If global markets, especially Asia, opens negative we will continue to fall further. However, 3900 should act as a good support
Foreign Institutional Investors (FIIs) turned net sellers in the equity segment worth Rs 9.25 billion on both the BSE and the NSE on September 23.While, Domestic Institutional Investors (DIIs include banks, DFIs, Insurance and MFs) turned net buyers in the equity segment worth Rs 687.7 million.
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HBJ Capital's View for Wed.
>>>>>>Equity Market is waiting for US bailout package by Congress. Market is clue less, there is no positive trigger or buying interest either from FII or from local traders. We can see F&O volume 6 times more than Spot, it seems people are trading more & more and not investing for long term. Congress is going to take some time may be by weekend to pass the bailout package, till then Indian Market will be in selling pressure.
>>>>>One can stay away from the market for couple of days, at least till friday. On friday it would be better to take a Nifty 4100/4200 Call Option for Oct delivery. This is in view that in case if Congress pass the bailout package over the weekend then one can expect rally on coming Monday.
>>>>>Also on the day of expiry, Sept 25th one can expect a pull back due to short covering because traders has build short position on monday & tuesday. On Thursday,it is better to play with Nifty Call Option which is in the money so that value of option increases inline with Nifty future.
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Federal Reserve Chairman Ben Bernanke bluntly warned reluctant lawmakers Tuesday they risk a recession with higher unemployment and increased home foreclosures if they fail to pass the Bush administration's $700 billion plan to bail out the financial industry.
Bernanke sketched a scenario in which neither businesses nor consumers could borrow money as President Bush and top lawmakers leaders in both parties voiced hope for agreement within days on a plan to ease the crisis.
"Nobody is happy" about the bailout request, said House Majority Leader Steny Hoyer, D-Md., although he spoke of possible passage of legislation by the weekend.
Congress believe if the credit markets are not functioning, that jobs will be lost, that our credit rate will rise, more houses will be foreclosed upon, GDP will contract, that the economy will just not be able to recover in a normal, healthy way.
-HBJ Capital Team
1 comments:
All your arguments are valid and i agree with you on the mkt direction but indian market is behaving diff from global market. 1st thing i do in the morning is to read hbj site.
keep it up even if sometime it doesn't work, because mkt is something which is difficult to time.
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