Sentiments of investors on India have turned negative and they seem genuinely concerned of the risk of the policy mistake in order to curb the currency volatility. Our latest fund managers survey shows that the Indian markets are now less loved than what they were three months back. However, these sentiments are still some distance away from the extreme bearishness of the past. Even most of the key technical indicators also show that while Indian markets are not liked but are not in the oversold territory. Any policy mistake could likely result in accelerated selling by the FIIs which could bring down the markets rapidly.
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Robert Prior-Wandesforde, head of economics research for Southeast Asia and India, Credit Suisse
One thing certain about the Indian macro economy right now is that it is hard to be optimistic. The current feeling of gloom is seemingly all pervasive as business and consumer confidence continue to shrink, the hard data continue to soften, the rupee faces substantial pressure, the RBI tightens liquidity and political factors remain unhelpful. Our central scenario is that Raghuram Rajan will shortly indicate that his primary goal, at least initially, is to stabilise the rupee, with the policy authorities backing this up with a series of measures designed to squeeze liquidity further, reduce the current account deficit and ease the financing of the external shortfall.
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Sonal Varma, economist, Nomura
Despite recent RBI tightening measures and the government’s game-plan to fix the balance of payments deficit, INR/USD has continued to depreciate. Hence, with gross capital inflows not in its control, the RBI is trying to tighten the noose around resident outflows. According to the RBI’s balance of payments data, private remittances abroad totaled USD3.3bn in FY13, while outward FDI totaled USD12.6bn. In our view, the RBI measures may have only a minor impact on resident remittances, but could have a relatively larger impact on outward FDI. Indian companies’ outward FDI have been growing in recent years for various reasons (pursuing growth markets, technology, natural resource etc.) and these could be adversely hit. While the authorities aim to reduce ‘FX volatility’, we fear that they may end up sending a panic signal.
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Amar Ambani, head of research, India Infoline
On the monthly charts, 5,380-5,400 is crucial support for the Nifty. A breach of this critical support will lead to a further sell-off. It would confirm a breach of the weekly head and shoulder neckline. A temporary pullback cannot be ruled out if the Nifty manages to hold above 5,380 on a closing basis.
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Dinesh Thakkar, CMD, Angel Broking
Rupee yet again has jolted domestic markets and the threat to further increase in inflation levels is on the cards. Monetary policy decision-making by the central banker in the upcoming meet will become even more challenging considering the complex domestic and international dynamics at play. The Indian economy is reeling under pressure, not only due to the fears of flight of capital ahead of the Fed’s expected move of QE taper, but also due to the negative domestic economic fundamentals that are driving the Rupee weaker. Concentrated measures and efforts by the RBI are likely to show an impact in the long run but in the short-term, the Rupee is expected to witness a bearish ride
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Sahaj Agrawal, Deputy Vice-President (Derivative Research), Kotak Securities
The markets have seen a sharp fall and the built-up position on the F&O front is indicating weakness. The Nifty can find some support at 5,400 levels. However, a breach of this level on the downside can lead to a panic-like situation. But still, the index should find support at 5,200 – 5,250 levels. I don’t think it can slip to 52-week lows
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Kishor Ostwal, CMD, CNI Research
So long as the rupee continues to slide, the chances of further correction are not ruled out. I think now now high price Sensex and Nifty stocks will be targeted as mid-cap stocks have no room for correction. Nifty support at 5,330 and faces resistance at 5,450. There are only few sessions left for rolls. In next two - three days, the market should bottom out and reverse its direction.
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Mudit Goyal, technical analyst, SMC Global
Nifty can find support near 5,330 – 5,300 levels. This is the last support for the Nifty which I can see on the charts. If it slips below this level, it can touch 5,000 levels and is unlikely to slip significantly below that or touch its 52-week low level
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Dipen Shah, Head- Private Client Group Research, Kotak Securities
The quarterly results season has ended and growth for the current fiscal is expected to be lower than earlier estimates. The increase in borrowing costs is expected to impact the debt-servicing capacity of various debt-heavy companies and will likely lead to an impact on earnings. A depreciating rupee will result in increased costs for various companies, thereby impacting margins. Thus, even at lower stock prices, the valuations have not turned appealing.
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HDFC Securities
The markets could find some support and stabilise at lower levels during the latter half of the session. Immediate support for Nifty is at 5300, while stiff resistance is at 5475. Among sectoral indices, Bankex, Auto, Capital Goods and Realty could underperform.