It was a very tough day on Dalal Street today. The brakes were slammed on yesterday’s pullback as the market grappled with weaker than expected earnings from Infosys and selling pressure in the financials. The Sensex shut shop today at 19,182 - down 351 points.
The big disappointment was Infosys today as it kicked off earnings season. Its Q3 results came in lower than expected, and stock tanked 5%. Volume growth at 3% disappointed the street although the management mentioned that industry will see growth of 18-20% and return to normal next fiscal.
ENVISION CAPITAL (Nilesh Shah): This is primarily because of the spiraling inflation and expectation of interest rates hardening this year". However, he felt, as long as 5,750 holds, the downside should be limited for the Nifty. He also added "The earnings season over the next few weeks will be very important for us. So far level of 5,750 has been an important level which it has by and large found support in the months of November, December and January. From a pure short-term perspective, as long as those levels are maintained, the downside risk to the market could be pretty limited".
ANAGRAM: Yesterday's mammoth recovery proved deceptive as benchmark indices gave away all the gains made in yesterday's trade, dragged down by Banking and IT stocks. Sensex slumped 351 points to close at 19183 while Nifty ended at 5752, down 111 points. BSE mid-cap and small-cap indices lost 0.8% and 0.6% respectively. Tech giant Infosys reported consolidated net profit of Rs. 1780 cr for the quarter ended December 2010, a growth of 2.5% q-o-q which fell short of the expectation of about Rs. 1815 cr. The company also missed estimates for future sales growth and warned of sluggish global economic growth. Infosys stock plunged 5.2%.
NIRMAL BANG: The markets ended in deep red after huge sell off seen in the banking sector and heavy weight stock like Infosys after delivering disappointing numbers. Moderate buying was seen in the Reality counter while Banking, Metal and Technology counters witnessed huge selling pressure. The Nifty closed at 5,751 down 111 points after making an intra-day high of 5,907 and the Sensex was at 19,182 down 351 points after making an intra-day high of 19,578. The Mid cap and Small cap indices both were down by 0.80% and 0.65% respectively. The breadth of the market was weak and the total turnover recorded at Rs 1,70,289Cr. Nifty Jan fut ended with 5 points premium.
K R CHOKSEY SECURITIES (Deven Choksey) is not hopeful that markets will hold strong levels. According to him, the pullback was never going to last because it lacked fresh buying. “Unless we find fresh buying taking place in the market, we cannot have the confidence of market going up." He also added that 5,700 is a very significant support level for the Nifty. “If it breaks that, then that could invite further selling pressure,” he stressed.
JATINDER SHARMA said, “The 5700 level has been a crucial level for the Nifty. Although the market has seen support twice at that level, he believe it may not be lucky for the third time round. “I think the market has been extremely volatile for the past three sessions and it has successfully tested the 5700 level twice. But I believe that it may not be third time lucky as one leg of the market i.e. the IT segment which was propping up the index for the past one and a half months is now on a weak wicket."
MODERN SHARES & STOCK BROKERS (Anil Manghnani): "With yesterday's pullback having been convincingly quashed today, the Nifty's core structure has been significantly weakened, and 5700 may not mean much and could break soon. Each time the Nifty comes back to 5700, it has weakened the market's structure. it's consolation that the market held 5700 but more and more sectors and stocks are getting weak. You are getting less and less stocks that can take this market up. It seems like the pressure is a lot more today. If we compare the prices today to about three weeks back when the index was at the same price it is much lower. That itself tells you that there is a problem. So I am getting a little worried and I don’t think 5,700 means anything now." He is also concerned that in yesterday's 300-point pullback, FIIs were net sellers, and sees considerable pain for the markets going forward.
KARVY STOCK BROKING (Ambreesh Baliga) sees 5700 as a crucial support. A breach of 5700 would see the market falling 500-600 points. "I just hope that does not happen because it will clearly depend on the newsflow, which come at that point of time. But for the time being that is a very good support level. We still believe that the market would be in this range of around 5700 to 5900-5950".
MITESHTHACKER.COM (Mitesh Thacker) said today's close above 5750 is significant. "In the declines in the month of November, we saw this level play out very nicely in this entire 50-point range of 5750 to 5695 I think has acted time and again on the intraday basis or on a closing basis acted as a good support". However, Thacker too feels that the level may be breached over the next few sessions. "All the volatility indicators have shot up which means that markets will be choppy like what we have seen for the last couple of days".
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