Slump is knee-jerk reaction, markets to recover: experts

Describing the slump in the market early this morning as a knee-jerk reaction to the negative global sentiment, experts today said the markets would soon bounce back and lots of value buying will happen at lower levels.

Indian stocks witnessed a massive fall this morning as the Sensex lost more than 500 points within minutes of the market opening on concerns over the US losing its top-notch credit rating due to mounting debts.

However, the markets recovered most of the losses by early afternoon trade and the Sensex narrowed its loss to just 58 points at one point of time.

Commenting on the market trends, Geojit BNP Paribas Financial Services Research Head Alex Mathews said, "Fall in the stock market was a knee-jerk reaction to the crisis in the US."

"For exporting companies like TCS, Infosys, Wipro, the outlook seems to be negative at the moment in the wake of slowdown in euro zone and uncertainty in the US," he said.

"On the positive side, crude oil prices are falling which is a good news for India. Base metal prices are also declining which too is a positive factor," he added.

For the Indian market, valuations are attractive at the moment. "Our markets are already in the oversold region, so even after a weak opening, it can bounce back when it closes today. There is a downside, but it is limited," Mathews noted.

"Sentiments are weak at the moment. But, I think a lot of value buying will come at lower level and the market will bounce back soon," CNI Research CMD Kishore P Ostwal said.

Marketmen said that a positive opening in some of the European markets also helped improve the market sentiment back home.

The sharp fall in the market comes after the US lost its 'AAA' credit rating for the first time in history, as rating agency S&P was not convinced with the efforts being made to tackle the country's debt problems.

Some experts also believe that the situation might turn into a boon for the Indian markets in the long term, as India is fundamentally stronger among its peers and attracts more international inward financial flows.

"In case there is any nervousness in the market, as happened in 2004 and 2008, it will be another opportunity for all classes of investors to make aggressive buying," Geojit BNP Paribas Financial Services MD CJ George said.