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MARKETS TANK AS THE REALISATION DAWNS THAT THERE IS NO GOVERNMENT PUT - HDFC Securities
The markets prolonged wait for a fiscal stimulus has gone unrewarded. The speeches by various Government officials, do not hold any promise that some major stimulusis on the way. This means that there is no Government Put that the markets have been assuming.
This gloom manifested itself on Thursday in full force and the Nifty broke its low of 10,782 formed on 5th August.
There are no meaningful supports now. If you ask technical analysts, they will have logical support at 10,500 and 10,004. Others will have a psychological round figures.
But the real support in the markets comes from the Government by virtue of fiscal stimulus or allowing change in accounting policies or changing the investment rules and taxation policies.
The other help could come from valuations. Lower prices mean, attractive valuations and investors could come in. But in the present economic gloom, even those investors will think twice.
The other help could come from short sellers. When they start to book profits markets can bounce on short covering.
At this time, pressure could also come on such sectors which have not been impacted by the markets so far- the IT sector for instance. So use options to hedge your profitable investments or trades in such sectors.
Fridays can also act as a turn around.
The regulator Securities and Exchange Board of India on Wednesday eased the regulatory and compliance framework for foreign portfolio investors by broad-basing their classification and simplifying their registration, entry and know-your-customer norms in a bid to boost investments.
But this will take time. The Gift city is a good destinations for FIIs to move their Futures trade but cash markets are still a question mark.
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HDFC Securities Limited (HSL) is a SEBI Registered Research Analyst having registration no. INH000002475
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