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Friday of the last week once again turned out to be a disastrous one for the bull operators and investors in...
Friday of the last week once again turned out to be a disastrous one for the bull operators and investors in Indian equities. Sensex based on 30 leading scrips fell head-long by 300 points to seven months low and pivotal scrips to their recent new bottoms. The devastating effect on the stock markets was the outcome of the very disappointing March quarter numbers as churned out by IT giant Infosys. The company came out with turnover and profit numbers, though up as compared with the previous corresponding period, fell much short of the market expectations. The company also provided a dismaying guidance for future financial performance. Not only that it skipped to spell out future EPS that it generally does at the time of declaring every quarterly numbers. Prior to Friday's stupendous fall of 300 points, the second biggest single day in 2013, the markets had come out of the sustained downfall and registered a small weekly gain of about 92 points at the end of the four trading days till Thursday. Of the first four trading days, Monday witnessed a loss of only 12 points indicating a possibility that the sustained fall may end soon as the pace of the markets going down was nearly arrested. The feeling that the bearish trend may have ended soon encouraged adventurous operators hike in their long positions. The act, however, turned out to be a disastrous one for them as the markets slumped down by 211 points the very next day. It was the turn of the bear operators to cover their short positions and lift Sensex by 188 points on Wednesday and another 128 points on Thursday thus taking the Benchmark index 92 points above its previous week's closing. The bear operators were tempted to cover their short positions especially in IT and banking stocks which led the rally on Wednesday and Thursday. Until Friday, the markets were agog with an idea that the numbers for March quarter of these two segment companies would be much better and therefore bears hastened to cover their short positions. Thus the most positions that were left to be squared off were the long ones. It was these long positions that got squared off on Friday after Infosys disappointed with lackluster performance and disappointing guidance. With the Cyprus and a war like situation between North Korea and South Korea in place and the macroeconomic problems continuing to cause grave concerns, the markets are unlikely to come out of the jolt of the kick start working results. However, since most of the bull positions have been squared off in the Friday's debacle, bull operators would chance to re-enter at low price levels for buying and thereby likely to provide support to the markets. The last week's bottom of 18186 is unlikely to be pierced in normal market conditions. However, in case of a war between North and South Koera or Cyprus becoming bankrupt, then the markets would slide further down. However, since the influential world leaders both in political and economics are making their best efforts to avert any untoward incident, the Indian stock markets can be assumed to settle down somewhere close to the current levels with the daily and weekly fluctuations being guided by the corporate numbers. Even end-February IIP numbers have been disappointing but the inflation rate has slightly softened. Both the situations are such that keep the hope of RBI pruning the interest rates during its monetary policy in May and although the corporate number season has kick-started with disappointment, there are many other IT and other companies that could surprise the markets positively. It is therefore advisable for the long term investors to hold on to their precious portfolios that they have been nurturing since long and possibly make fresh additions if prices of good and leading stocks fall further down.
17 July 2019 7:52 AM GMT