Sensex To Bottom Out At 3300

The stock market is expected to witnesss a further slide of 100-150 points in the short-term and is likely to bottom out at 3300-levels.

According to leading market players, the falling Southeast Asian stock and currency markets will induce a bearish trend as leading foreign institutional investors (FIIs) continue to hold back investments.

We expect the market to decline by 100-150 points in the short term, says Nailesh Dalal, director, Dalal & Broacha. He feels that since foreign institutions do not have a large exposure in India, the decline in the Indian stock markets will be a steady one.

The East Asian crisis will certainly trigger a further fall in stock prices. FIIs will continue to drive the market by their presence or absence. The B group stocks have already touched their rock-bottom prices and are unlikely to fall further. However, some key A group stocks will witness a decline to find the bottom at 3300-levels, he added.

 

M G Damani, president, BSE feels that at 3300-levels institutional buying will push up stock prices. Institutional activity will increase at 3300 levels. It is also expected that the small investor will get back at these levels. However, there should be some move to provide an exit route in B group shares. Their entry is crucial for the market, he said.

Ajit Ambani, BSE broker feels that the market may not witness heavy selling.

The badla trading resulted in an average badla rate of 1-1.5 per cent. This indicates that there was hardly any interest in carrying over positions. When people want to carryforward positions on trends in the market, badla rates are very high. The market also witnessed undha badla in Reliance and SBI which would mean slightly firm opening on Monday for these stocks. However, this would not be reflected in other scrips. People have already booked losses in the last settlement, he said.

Analysts feel that investors should realise that the time is to invest in good company stocks. In the short term investors should concentrate on good pharmaceuticals, a few consumer durables and FMCG stocks. The fall in the market has made many forex earning stocks attractive. Significant stocks are available at low P/E ratios, Dalal added.

Many foreign brokerages have given an overweight rating for India. Brian Brown, managing director of Indo Suez W I Carr Securities, felt that the commencement of the depository trading on January 15 would bring in more foreign investors in India.

Foreign investors will find it difficult to make any allocations due to volatile conditions in East Asia. However, prospects of an anti-FII policy by the new government led by the Bharatiya Janata Party is a worrying factor for foreign investors, he said.