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11/02/2016 BloodbathonDStreet:FivereasonswhySensexslumpedbyover800pointsTheEconomicTimes
http://economictimes.indiatimes.com/markets/stocks/news/bloodbathondstreetfivereasonswhysensexslumpedbyover800points/articleshow/509 1/2
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ByECONOMICTIMES.COM|11Feb,2016,03.12PMIST PostaComment
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BloodbathonDStreet:FivereasonswhySensexslumpedbyover800points
NEWDELHI:TheS&PBSESensexplungedover800pointsinafternoontradeonThursdaytohititsfresh52weeklowof23,057.36,ledbylossesinrealty,power,bank,capitalgoods,consumerdurable,andmetalstocks.
TheNifty50cameunderpressureinthelast11/2houroftrade,fallingover200pointstoregisteritsfresh52weeklowof7,003.75atthetimeoffilingofthereport.
(Forminutebyminutemarket/stockupdates,followourTwitterhandle@ETMarkets)
IfoneweretogobythebuzzonDalalStreet,hereiswhythemarkethascrashed.
Bearhugtechnicalfactors:Thebenchmarkindicesaretradingwellbelowtheirsupportlevels.But,analystseefurtherdeclineinmarketswhichcouldtakeNifty50towards6,7006,800levels.TheNifty50appearstobeinthelastlegofsecondcorrectivestructurewhichisinprogresssinceAugust2015,sayexperts.
InvestorscanlookatgoinglongifNifty50fallstowards67006800levels,becausethatiswhereaneartermbottomisplaced.
"Basedonconventionaltechnicalanalysis,onlongtermcharts,strongsupportsareplacedaround6700levelswhereweexpectmarketstobottomout.Longtermstructurebasedonwavecountsisstillbullishlypoisedandhencewearecomfortableincreatinglongpositionsaround6700levels,"saidMazharMohammad,ChiefStrategistTechnicalResearch&TradingAdvisory,Chartviewindia.in
"Rightnow,forNiftythislookslikeaworstcasescenariowheremarketsshouldbottomout.However,onmediumtermchartsreasonablesupportlevelsareplacedinthezoneof70976875,"headded.
USFedcommentary:ThecommentaryfromUSFederalReserveJanetYellenissomethingwhichmighthavecaughtinvestorsbysurprise.Mostexpertswerepencillinginaratehikeby2017amidslowdowninglobalgrowth,glutincrude,andChinajitters.
FederalReserveChairJanetYellentestifiedbeforetheHouseFinancialServicesCommitteeWednesday.ShesaidthattheFederalReserveisunlikelytoreverseitsplantoraiseinterestratesfurtherthisyear.
However,shehighlightedinherstatementthatvolatilefinancialmarketsacrosstheglobe,tighterliquidityanduncertaintyoverChineseeconomicgrowthhaveraisedriskstotheU.S.economy.
"ThiswasacredibleretracementinourviewandIthinkthatthetwopointsweshouldkeepinmindwasthatJanetYellenquiteexpressivelysaidthattheturmoilinthefinancialmarketsaswellaswhatisgoingoninChinadoesthreatenthegrowthoutlookfortheUS,"saidSanjayMathur,SeniorEconomist,RBS.
"Thesecondpointshesaidwasthatfearsofeconomicslowdownarenotfeedingintoassetpricesandtosomeextentsheistryingtopointtothefactthatnegativewealthaffectscouldhaveabearingontheeconomy,"headded.
"Netnetwhenwelookatit,itisgettinghardandharderfortheFedtojointhefourdotsthattheyhadsortofpredictedinDecemberandyoucanseethatinthemarketaswell,"saidMathur.
Fallincrudeoilprices:CrudeoilpriceshavebeeninadownwardspiralsinceJulyof2014.ThebenchmarkBrentcrudepricesinLondonhavecrashedfrom$106inJuly,2014to$30today,adropofover70percent.
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11/02/2016 BloodbathonDStreet:FivereasonswhySensexslumpedbyover800pointsTheEconomicTimes
http://economictimes.indiatimes.com/markets/stocks/news/bloodbathondstreetfivereasonswhysensexslumpedbyover800points/articleshow/509 2/2
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UScrudetumbledbelow$27abarrelinAsiatodayastheoversaturatedmarketstruggledtocopewithhighinventoriesintheUnitedStatesandanincreasedoutputfromOpec,saidamediareport.BrentcrudeforAprilfellto$30.52abarrel
ThedeclinecamedespitetheweeklyUSDepartmentofEnergyreportshowingUSoilstocksfellabout800,000barrelsfortheweekendingFebruary5,withtradersseeinginventoriesstillathighlevels.
"Whatweareexperiencingintheglobalmarketislargeramountofpressurecomingupfromtheredemptionandthisredemptionpressureisduetothecollateraldamageaidedbyfallincrudeandcommodityprices,"saidDevenChoksey,MD,KRChokseyInvestmentManagers.
"IfthispressuresubsidesandifthispressurecomesdownthenIdonotthinkthatthemarketwouldgodowninhurryorprobablygodownbadly,"headded.
RiseinNPAleadsspooksbanks:Thefallintheindexwasledlargelybybankingsector.MostofthePSUbankshavereportedover40percentjumpinprovisionsrequirement.Asmuchas85percentofthebankingsystem'sweakassetsareinthebooksofpublicsectorbanks(PSBs).Increasingstressisalsovisibleinthequantumofstrategicdebtrestructuringand5/25structuringbeingcarriedoutbybanks.
Crisilbelievesintensifyingassetqualityproblemsatpublicsectorbanks(PSBs)havethepotentialtoimpairtheircreditriskprofilesandnecessitatesignificantlyhighercapitalisationofPSBseitherthroughgovernmentinfusionorrelaxationofregulatorycapitalnorms.
"Overthepast18months,Crisilhaseitherdowngradedorreviseditsoutlookto'Negative'onnineoutofthe25PSBsthatitratesonthebackofexpectationsofworseningassetquality,"saidthereport.
Disappointingearnings:DecemberquarterresultsforIndiaInchavefailedtoimpressDalalStreetatlargeandifearningsdon'tpickupthereisnocaseofabullmarket,sayexperts."Bullmarketsnormallycomewithearningsgrowth.Butifthisisabullmarketcorrection,thenthisisthefirstbullmarketwhichisnotcomingwithearningsgrowth,"saidSridharSivaram,InvestorDirector,EnamHoldings.
"Allbullmarketscomewithearningsgrowth.Bullmarketsnormallycomewithearningsgrowth.But,thishastobetheonlybullmarketwhichcomeswithearningssortofdowngradesthroughout,"headded.Thishastobetheonlybullmarketifthisisabullmarketwhichcomeswithearningssortofdowngradesthroughout.
IfglobaleconomyisgoingthroughastructuralchangeIndiaInc.mightnotbeabletopickthepaceasforecastedbyvariousanalysts.Themarketdoeslookattractiveatcurrentlevels,butwithnoearningsgrowth,marketswillnotpickpace.SivaramisoftheviewthatIdon'tseeearningscomingbackinahurry.Thenextyearconsensusnumberevennowiscloserto18%,andIcannotseethathappening."Wewillcloseto10%,"headded.
"Wewillcontinuetoseeearningsdowngrade.Wecouldhaveanothersharpcorrectionfromcurrentlevels,andIdonotseethemarketsmovingsubstantiallyupformhere,"headded.
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