Sensex tanks 1.62% to 7-month low - Karvy

It was a week best forgotten. The carnage in the market on Friday with Sensex tanking 1.62% to a 7-month low and Nifty dipping 1.17% was unexpected by any measure, leaving many investors scurrying for cover. The biggest drag on the market was the disappointing revenue forecast of the IT bellwether Infosys. India's second biggest software services fi rm declared Q4 results and forecast full-year dollar revenue growth of 6-10%, much less than 12% what analysts had expected. The stock dipped 21.33%, the most in a decade.

But it was not only the less-than-expected show by Infosys that spooked the market. The IIP numbers, though in positive territory (0.6%) too turned investors off. Manufacturing sector, making for over 75% of the index, grew by a paltry 2.2% in February, as against 4.1% in the same month last year, reinforcing fears that the economic slump is here to stay.

The third negative that seems to have played out in pushing down the market was dip in domestic gold prices, following global cues. Gold is traditionally reckoned as a safe haven instrument but on Friday it fell below Rs 29,000-mark. The precious metal has so far lost a whopping 17% of its value from its peak.

All in all, it seems the economic slowdown in the country is cutting deep into investor sentiment. But is it just a fl ash in the pan or a tell-tale sign of the prolonged bearish phase in the market? The India story needs a fresher script.

For the week, the Nifty has posted a seven-month low of 5477 level and displayed a range-bound trade action with the upside cap at 5610 levels. The Banks, Auto, Realty, FMCG, Pharma, Capital Goods and Consumer Durables had seen healthy participation outperforming the broader markets.

On the other hand, IT and Metals sectoral indices have underperformed the benchmark indices. Long positions can be assumed in Banking, Cements, FMCG, Pharma and Energy if the Nifty sustains above 5550 levels in the coming week. Short positions can be accumulated in Automobiles, Capital Goods, Consumer Durables, IT and Metals if the Nifty slips below 5500 levels. Overall, we expect Nifty to trade in the range of 5450-5650 levels for the next week.

Source : Equity Bulls

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