The domestic equity markets are likely to witness further weakness this week as the Euro-zone crisis is expected to continue to haunt the markets if no solution is reached. Market observers say the situation is quite uncertain and market directions will depend on the flow of global news.
Last week saw a free fall in the market throughout the trading days. CNX Nifty plunged 259.95 points, or 4.93 per cent, on a weekly basis to close at 5,018 on Friday. Similarly, the Bombay Stock Exchange Sensitive Index, or Sensex, dipped 789.60 points during the week and came below 17,000 levels to close at 16,769.11 the previous week’s close of 17,558.71.
The last week’s corrections — a fall of close to 6 per cent from the peak — has brought the markets in a comfortable fair-valuation zone. “However, if global bad news persist, we expect there could be a further fall of 6 per cent,” said N Sethuram, chief investment officer at Shinsei Investments. But at the same time, market experts say domestic markets may show some resilience too. According to Prateek Agrawal, equity-head at Bharti AXA Mutual Fund, “If European leaders could find solution for the crisis, we expect some bounce back in the range of 2-3 per cent.” Chief Investment Officer of one of the largest fund houses, said, “A further fall of 200-300 points could be on the cards but dipping to levels of 16,000 does not look like a possibility. We can see domestic investors buying into these lower levels.” Levels of 5,000 on the Nifty will be an attractive level to buy into the markets, added Agrawal.