Better be despised for too anxious apprehensions, than ruined by too confident security. -Edmund Burke.
Confidence goes for a toss when the world comes tumbling down. Despite less leverage, fear may overtake temptation while attempting to pick stocks as the sentiment swings wilder by the day. Interestingly, the Japanese market has escaped the global carnage as it has been shut for 3-4 days. May be it will react when it resumes trading. South Korea’s market is also closed today.
No such luck for India, as the market is all set to witness deeper cuts. All round selling dragged the NSE Nifty below 50day DMA which it had managed to hang on to for over a month. Most technical and derivative indicators are showing further weakness and the Nifty is set to test 5050. The best tactic in such turbulent times is to stay away and wait for stability to return.
US stocks suffered their steepest drop in three months, as risk tolerance collapsed amid mounting concerns over the European debt crisis. The S&P 500 index has dropped to its fourth test of support at the March peak of 1,180. A close below this level would likely signal a near-term downtrend, according to technical analysts.
Spanish stocks led losses on European equities indices as mounting doubts over Greece’s bail-out and fears of contagion to other eurozone periphery countries haunt investors. The dollar benefited from safe haven status while the euro suffered as investors continued their lukewarm reception to the Greek rescue package.
The cost of insuring Spanish and Portuguese government debt against default soared. Also, hung parliament risks loomed for Great Britan as the general election nears. The top priority for the ultimate winner in the UK election will be to convince ratings agencies that the high budget deficit will be fixed soon.
Oil futures also had their worst one-day drop since early February. Gold prices backtracked from five-month highs. Commodities weakened as worries over an economic slowdown in China added to nagging concerns over the eurozone’s sovereign debt crisis. Base metals plunged.
Wall Street's key index of volatility hit its highest level in more than two months. The VIX (VIX), which gauges fear in the market, surged more than 18% to close at 23.84 on Tuesday. That's the highest reading since the middle of February and up 53% since early April, when the VIX was trading at a three-year low.
Results Today: Alembic, Allcargo Global, Brigade, Elder Pharma, Granules India, JB Chemicals, Lupin, Mid-Day, NIIT Tech, Prism Cement, TN Petro and UB.
On a day, when the market plummeted, FIIs were net sellers of only Rs296.8mn in the cash segment on Tuesday on a provisional basis, according to NSE web site. Local institutions were net sellers of Rs4.38bn. In the F&O segment, the foreign funds were net buyers of Rs2.34bn. FIIs were net sellers of Rs2.36bn in the cash segment on Monday, as per the SEBI data.
The Indian markets got derailed even as citizens in Mumbai continue to struggle without its lifeline - the suburban local trains. "Market sentiment were hit badly amid concerns that the People's Bank of China will go for more monetary tightening. In addition, lingering concerns regarding Sovereign debt problems further fueled a sell-off on Dalal-Street", says Amar Ambani Vice President IIFL.
Tuesdays are often infamous to start one way and end the other way. After starting off with modest gains, markets were unable to hold on and slipped sharply after all round selling across the sector dragged the NSE Nifty below its 50day DMA which it managed to hold for more than a month.
Finally, the BSE Sensex lost 249 points to end at 17,137 and NSE Nifty fell 74 points to close at 5,149. Among the 30 components of Sensex, 28 ended in the negative terrain and only HDFC and Hero Honda ended in the green.
Markets in Asia ended in the red; the Nikkei in Japan was closed in a second day in a row, Australia's S&P/ASX was down 1%, the Hang Seng index in Hong Kong was down 0.3% and Shanghai SE Composite also was closed.
On the other hand, European indices were trading in the red, the DAX in Germany was down 0.8%, the CAC 40 index in France was down 1.5% and the FTSE in the UK was down 1%.
All the other sectoral indices ended in the red. The BSE Metal index was top loser; the index lost 3.9%, followed by BSE Realty index down 2.7% and BSE Capital Goods index down 1.69%. Even the Mid-Cap and the Small-cap index lost 1.75% each.