Nifty can slip to 7,800 levels: analysts

Analysts suggest that the worst may not be over for the markets just yet. Here is a compilation of what they say

The markets continued to drift lower on Thursday with the CNX Nifty slipping nearly 2%, or 160 points, to end at its 8-month low level at 7,965.

Over the past 30 days, the CNX Nifty has lost nearly 4.3% on the back of concerns relating to weak monsoon, lower than expected growth in corporate earnings in the recently concluded quarter, outlook for interest rates and a host of global factors.

Analysts say that the worst may not be over for the markets just yet. However, they do suggest that there could be intermittent bouts of recovery. Here is a compilation of what the market experts say.
 

Rakesh Arora, managing director and head of research at Macquarie Capital Securities (India)

The markets are failing to sustain at higher levels because there is no support coming in from the fundamentals. Markets now need an improvement in fundamentals before they can go up and sustain at higher levels. We hope that the action on the ground really picks up now.



Sanjeev Zarbade, vice president - private client group research, Kotak Securities

The selling pressure is mainly coming from the FII (foreign institutional investors) side. Weak monsoon, rise in global bond yields, expected inclusion of China A shares in MSCI index are some of the possible reasons for the recent sell-off. Having said that, growth drivers continue to be strong in India aided by a reform-oriented government, demographic advantages, downside to interest rates and structural upturn in earnings growth.

Amar Ambani, head of research, IIFL

The current turmoil in the market cannot be blamed on local reasons only. With a lot of investor appetite for other emerging markets, global investors are changing their allocations accordingly. India, which enjoyed an overweight position so far is beginning to feel the heat as money is moving to other markets. The continuous fall has led to technical support levels being breached at regular intervals. Technically, the Nifty has breached the neckline of the complex head & shoulder pattern indicating that indices could hit further lows in the coming days. Nifty would seek support at 7,900 which is the 38.2% retracement of the entire bull-run since the multi-year break-out in March 2014.

Vinod Nair, head of fundamental research, Geojit BNP Paribas Financial Services

Since the last week of May, markets have consolidated down except for the recent positive movement seen on account of MSCI's decision. On Thursday, we saw profit booking along with reaction towards poor macro numbers. Confidence is poor and we believe market is yet to rationalise earnings growth outlook for FY16/17. Given we have breached 8,000 levels on the Nifty, we would test 7,800 levels. On Friday, we await May CPI (consumer price inflation) numbers and consensus stands at 5% y-o-y vs 4.87% in April.

Angel Broking

We continue with our ‘sell on rise’ strategy in the market and expect lower levels of 7,900 – 7,850 on the Nifty in next few days. We reiterate that short term traders shouldn’t be in a hurry to expect bottom in the market and should avoid catching a falling knife. On the higher side, 8000 – 8050 are seen as immediate resistance levels for the index.