The domestic equity markets are unlikely to see a break in the downward rally witnessed last week. Market experts opined that the market may open 150-200 points down on Monday on the back of fresh news flow of the US regulator’s action on Goldman Sachs and the Reserve Bank of India’s expected liquidity tightening measures on Tuesday.
In the previous week, CNX Nifty slipped 99.15 points or 1.85 per cent on a weekly basis to close at 5,262.60 on Friday. Similarly, the Bombay Stock Exchange Sensitive Index, or Sensex, plunged 401.96 points during the week to 17,591.18 against the previous week’s close at 17,993.14.
Manish Sonthalia, equity head at Motilal Oswal, said, “As far as hike in CRR, reverse repo and repo rate is concerned, the market already has well discounted on this front. We expect the hike to be around 50 basis points across all rates. Goldman Sachs issue will have its negative impact on the market this week.”
On Friday, the US Securities and Exchange Commission (SEC) had sued Goldman Sachs Group Inc for a fraud tied to packaging and selling collateralised debt obligations (CDOs) that contributed to the worst financial crisis since the Great Depression of the thirties. SEC even alleged that Goldman Sachs structured and marketed CDOs that hinged on the performance of subprime mortage-backed securities. Chief Investment Officer (CIO) of one of the leading fund houses, said, “Global markets will negatively impact our markets too. Goldman Sachs is a matter of concern as it has its structured products in several emerging markets including India.”
According to N Sethuram, chief investment officer at Shinsei Investments, said, “Goldman Sachs is a big thing. The market will definitely fall as Asian markets will react to this on Monday.” On sectoral side, market analysts pointed out that sectors which consume commodity may underperform the market depending on the RBI’s policy. “For instance, real estate, capital goods and construction may underperform,” they added.
