INSUBCONTINENT EXCLUSIVE:
At the very start of 2018, the market witnessed a serious correction for 38 days and reversed thereafter
somehow managed to hold the 10,000 level
This is just the first leg down from where the momentum indicators have reversed from an overbought territory to an oversold territory and
that generally happens when the overall trend reverses
So, where is the bottom
The recent correction came after sustained withdrawal by foreign institutional investors from the market amid debt
default by one of the leading NBFCs
However, the correction earlier this year came mainly due to reclassification of mutual funds in the midcap and smallcap segments
Rising crude oil prices and a falling rupee have been impacting sentiment on Dalal Street since the beginning of the year
The Nifty50 settled the previous year with a gain of 28 per cent
Macroeconomic conditions are not favouring a bottom, as US sanctions on Iran might lead to supply disruptions, which may cause a potential
pretty much oversold, but sentiment is spoilt and the big risk now is that if the market breaks through the 10,000 level and the next key
support is tested, you could see heavy selling coming in again
There is no catalyst as such
Smart money might be bottom-fishing, but we do not know where the bottom is
of August looked more severe, as the benchmark indices lost more than 2 per cent on three occasions in October, whereas it dipped over 2 per
cent only once during the previous correction earlier this year (Jan 29 and March 23)
recovered 17 per cent till August 28
However, from there on, the index has corrected around 15 per cent till date.
How have the sectors behavedSelling was severe in sectors like
metals, realty, banking, capital goods and healthcare, when market plunged from the top hit on January 29
Before hitting the second top this year, major recovery was seen in sectors like IT, FMCG, Bankex, Healthcare and TECK indices between
Power and realty stocks continued to bleed.
The ongoing selling has hit almost all sectors with the BSE Realty index falling 24 per cent
between August 28 and October 26
Others, including BSE Auto, Consumer Durables, Bankex, Oil Gas, FMCG, Capital Goods, Teck and Healthcare indices have dipped between 10 per
cent and 23 per cent in this period
Stocks from the NBFC sector plunged up to 73 per cent
Sweet spotsAt present, the market is in consolidation mode due to various macro-economic headwinds, while the broader market (midcaps and
smallcaps) have seen a deep correction this year
Sampath Reddy, chief investment officer, Bajaj Allianz Life Insurance, said the valuation premium in the midcap and smallcap segments has
The deep correction in midcap smallcap segments (particularly quality stocks) is starting to present some selective value, and long-term
sees value emerge in manufacturing, infrastructure and utilities segments.
