The markets sold off on the barrage of bad news from the economy. With higher inflation, lower Index of Industrial Production (IIP) numbers and crude shooting up to over USD 145 per barrel, the Nifty closed down 113 points, the Sensex was down 456 points.
Technical Analyst Ashwani Gujral feels that people should not be so gung-ho on rallies in a bear market because they terminate suddenly and bad news tend to come on all resistance levels. Today's newsflow should have seen a 500-point gap up, but after 120 points, markets slid into the red.
Ambareesh Baliga of Karvy Stock Broking believes that at this point in time if 3,850 is broken, then markets are straight away headed towards 3,600 levels.
On the Nifty, he is looking at 3,850 as a bottom and 4,100-4,150 would be broad range for the Nifty.
On Sensex levels, Baliga said, "We cannot have a major pullback from here. I do not think we will see levels of 18,000-19,000 very soon. The way things are today, we will see that level possibly only in the Q1 of next year or possibly in the middle of next year."
Excerpts from CNBC-TV18's exclusive interview with Ambareesh Baliga:
Q: The markets taken these Index of Industrial Production (IIP) numbers quite badly?
A: Yes because after all the expectations, they were much higher than the figures which came; normally it is expectations versus delivery. So the deliverables were much lower than what people are expecting. If you look at the inflation figures up to 12.5-13%, people have been expecting over the next couple of weeks. So when the inflation figures came it didnt spook the markets, but when the IIP figures came they are surely lower than what people expected.
Q: There was almost an expectation that in the near-term, the market might just pull up a bit in a relief rally. Do you think the chances of that are getting dimmer now with this kind of a setback?
A: Yes, quite dim at this moment, because we were upbeat on the market in the last couple of days, in fact we were among those who were talking of a pullback up to 4,350-4,400 levels, but we got stopped out today around 4,100 levels.
Q: Where do you think this bout of weakness might take the market, because the sense one was beginning to get by the time we were ending the week was that at least a near-term bottom was getting formed?
A: I suppose the bottom is still there, which is at 3,850 levels, because I do not think 4,000 levels will give any support because today surely we would be closing quite weak and if the international markets, which we expected to be weak today, we could actually open with a gap on Monday. So I do not think 4,000 marks will have any meaning as such. I think we will have to look at 3,850 whether that holds that support or not, because if that breaks then I think we are straight away headed towards 3,600 levels.
Q: How are traders generally approaching the market right now? Are most looking for shorting opportunities or is everyone a bit cautious about taking any Nifty position right now?
A: Last couple of days we saw a number of those old traders who had gone into retirement come back and trying their luck in the market when we saw that bounce back. But the normal thing is that people tend to go long than go short. So when the market was going up, people had come in but quite a few of them must have surely got stopped out, so as of now people are not looking at going short. But I suppose the smarter guys surely would have gone short today.
Q: What is the broad Sensex range you are mapping for the rest of July?
A: On the Nifty, we are looking at 3,850 as a bottom and possibly around 4,100-4,150 is a broad range for the Nifty and similarly for the Sensex, which should also be in the range of 1,000 points or so.
Q: At this point whats your own sense of how the rest of this year will shape up? Will it be a significant pullback from the damage done in the first six months or will we be lucky to get away just range bound?
A: We cannot have a major pullback from here. On the Sensex, I do not think we will see levels of 18,000-19,000 very soon. Two to three months back we were hoping that we could see those levels of 18,000-19,000 possibly by October-November. But the way things are today we will see that level possibly only in the Q1 of next year or possibly in the middle of next year. So I think this pain is going to last much longer and I just hope that we do not see much lower levels than these; people have been talking about 12,000-10,000 levels. In case we see those levels, 18,000-19,000 could be pushed back by another year and a half or two years.
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