It’s a downward slide in the stock markets. You have levels being flashed one after the other. The Sensex tanks close to the 35000 mark and the Nifty dipped lower below 10,550. The chartists are flashing red flags about moving averages crumbling and the average investor worrying about their savings. The Bank Of America Merrill Lynch says a storm is brewing across the Indian stock markets and they have taken a cautious stance on the issue.
According the BofAML report further downside is likely for the markets. Their December target for the Sensex is closer to 32000. That implies over 10% additional slide from current positions. The weakening rupee and the rising crude prices are considered to be the key triggers for the downward spiral in the markets. That apart, The Government’s move in the IL&FS case also has a definitive bearing on the markets.
The precariously placed international macro situation is not helping the markets either. Rather this has also resulted in exerting additional selling pressure on the markets for an extended period. Certain experts say that the market is awaiting relief measures from the Government with regards to the rupee. It is currently hitting fresh all-time lows almost on a daily basis and that surely does not augur well.
All of this has also revived fears of a rate hike by the Reserve Bank of India. The impact of this on the other macroeconomic parameters can be quite telling as well. Meanwhile the Nifty is breaching several support levels on the technical side. Any further down move may actually start triggering stop losses on a longer term basis.
So overall there is a note of caution from key experts on the Indian markets. There is a concern that GDP growth estimates are too optimistic and rising import costs may actually impact that to a considerable extent. Slow capital inflows too may arrest a sudden sharp upward movement in the market. As a result, the retail investors need to focus on the longer term perspective. Any expectation of sharp and sudden windfall may not materialize at the current levels.