 "Markets: Some more pain in the near-term, say analysts")
Ten stocks – State Bank of India (SBI), Larsen and Toubro (L&T), ICICI Bank, Ambuja Cements, Grasim Industries, Jaiprakash Associates, Bank of Baroda, IDFC, Punjab National Bank and Bharat Heavy Electricals Limited (BHEL) from the CNX Nifty-50 hit their respective 52-week low on the National Stock Exchange (NSE).
“Market corrected sensing weakness of the economy and failure of the RBI and government to sort out currency slide. So long as the rupee continues to sliding, chances of further correction are not ruled out. I think that the Sensex and Nifty stocks will be targeted as side mid-cap stocks have no room for correction. The Nifty has support at 5,330 and faces resistance 5,450 levels. There are eight sessions left for the derivative expiry and the markets should bottom out and reverse their direction soon,” Kishor Ostwal, CMD, CNI Research says.
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On a slippery slope
A total 34 stocks from the BSE A Group also recorded their 52-week low levels in trade on Monday. The list includes ABB, Bank of India, HPCL, Dish TV India, JSW Steel, Tata Chemicals and Siemens.
Given the steep fall in the last two trading sessions, can the benchmark indices hit their respective 52-week lows in the days ahead?
Points out Jyotivardhan Jaipuria, managing director and head of research at Bank of America-Merrill Lynch: “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.”
Says 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.”
Mudit Goyal, technical analyst at SMC Global suggests that the market (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,” he says.
Adding: “Metal and capital goods stocks appear oversold on the charts. Tata Steel, Jindal Steel, JSW Steel are some metal stocks that look oversold. From the capital goods pack, BHEL is highly oversold. As regards Larsen and Toubro, one should wait for a dip to Rs 700 levels before taking a fresh position in this counter.”
However, Amit Trivedi, a technical analyst with K R Choksey Securities has a more bearish view and suggests there are no signs of any reversal as of now.
“The outlook remains negative. The important level on the downside is 5,400 in the immediate term. Beyond that, I don’t see any support till 4,900 levels. In the medium-term, say three – six months, the Nifty can slip to its 52-week low of 4,800 levels,” he says. On October 5, 2012 the 50-share Nifty dropped over 900 points to a low of 4,888 due to a freak trade.
Chandan Taparia, derivative analyst, Anand Rathi Financial Services also maintains a cautious view given the steep fall since the past couple of sessions. “Nifty has broken the trading range of 5,500 – 6,200 levels of the last 11 months. If it continues to hold below 5,500, weakness may continue. It is tough to say right now if the Nifty can touch 4,800 since it has support at 5,100 levels," he suggests.