Shaky confidence, nervous sentiment!

Risk comes from not knowing what you're doing. - Warren Buffett.

Thursday’s thrashing of the bulls has increased the risks, at least in the short term, as investor confidence has been shaken. The sharp selloff this week has dealt a short-term blow to the sentiment after last week’s smart recovery. The decay in the Small-Caps and Mid-Caps has spread to the Large Caps as well. Margin calls’ cascading effect has been another culprit, especially on the non-index counters.



Nobody has a clue when the bloodbath will end and how much more damage will be done to the market. So, wait for things to settle down a bit before taking a fresh call. At the same time, the steep fall presents an opportunity to pick up good quality stocks.

October IIP data will be closely watched today. Hopefully it would have something for the markets to cheer about. But, don’t get caught off guard as the undertone is fragile. We continue to advocate caution as breach of November’s low of 5690 could trigger further fall.

The key indices are likely to fall anew at start but the action will be in the broader market. One has to see how that behaves. The FII selling in the past few sessions is not helping even as DIIs have turned buyers.

In terms of domestic data points, next in line will be monthly inflation (Dec. 14) and the RBI's mid-quarter review on Dec. 16. Next week will be truncated due to holiday on Dec. 17. A whole host of Chinese economic statistics will be unveiled early next week.

FIIs were net sellers of Rs 12.96bn in the cash segment on Thursday while the domestic institutional institutions were net buyers of Rs 8.27bn, according to the NSE Web site. FIIs were net buyers at Rs 8.2bn in the F&O segment. The foreign funds were net sellers at Rs 12.97bn in the cash segment on Wednesday, as per the SEBI data.