Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
In a bear market? - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 2, 2001

    In a bear market?

    The Sensex has lost 4.4% since the close on Monday last and 184 points in the last three trading sessions. The BSE sensitive index had gained 9.3% since the last weekly decline in April '01. However, more than half those gains were washed away in the recent sell off.

    The absence of any triggers has left the market directionless leading to nervousness among the participants and consequently kept them near the exit door. The recent slide on the NASDAQ arising from renewed fears on corporate earnings, especially in the new economy, stubbed the domestic tech rally. Sun Microsystems warned that revenues and earnings for the third quarter will be below earlier targets.

    Adding to the woes are fresh reports of industrial slowdown, shortfall in Government tax revenues and a downgrade in sovereign rating. All of which, took the old economy counters in. The Index of Industrial Production (IIP) for the first eleven months of FY01 grew by 5.1% compared to 6.4% in the corresponding period of the previous fiscal. IIP growth for month of February '01 was a meager 0.6% YoY. Government tax revenue collections are expected to fall short of FY02 targets, which could impact the sensitive fiscal deficit number. Also, credit rating agency, Fitch, downgraded India's sovereign rating from stable to negative. The normal monsoon has been the only saving grace. However, distribution yet remains a grey area and at the risk of being proved wrong, the weather is more fickle than the markets. Needless to say, actuals could turn out to be at variance to the forecasts.

    During the bubble days the Sensex rose by an estimated 114.7% from the lows seen in October '98. Over a very similar period the NASDAQ rose by a whopping 255.7%. Since busting of the tech party the NASDAQ has fallen by 3,410 points or 67.5% (high to low). Meanwhile, the BSE Sensex crashed by 2,750 points or 46.3%. Both the indices have moved higher after reaching close to their pre-indulgence levels. But are they yet to pay more penance?

    As mentioned earlier, the lack of visibility on market direction could keep participants on the edge of their seats. Rallies could remain weak and fizzle out on the slightest hint of bad news. The outstanding position on the BSE is currently Rs 8.3 bn. The average trading value on the BSE for the month of May was Rs 14.5 bn. With 20 trading sessions remaining before the ban of deferral products, the average daily liquidation works out to Rs 413.3 m. This is a significant 28.5% of the daily trading value and could impact direction of the markets. However, open positions prior to May 15, 2001 can be squared off before September 2, 2001. Consequently, selling pressure to that extent could be reduced.



    Equitymaster requests your view! Post a comment on "In a bear market?". Click here!


    More Views on News

    How to Ride Alongside India's Best Fund Managers (The 5 Minute Wrapup)

    Jun 10, 2017

    Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.

    Why Hasn't Warren Buffett Rung the Bell Yet? (The 5 Minute Wrapup)

    Aug 22, 2017

    It's surprising Warren Buffett hasn't warned investors about the expensive stock market? Let us know why.

    Think Twice Before You Keep Money In A Savings Bank Account (Outside View)

    Aug 22, 2017

    Post demonetisation, a cut in bank savings deposits rates was in the offing.

    A Darkness Is Spreading Across the US (Vivek Kaul's Diary)

    Aug 22, 2017

    Today, we are attacked by one preposterous thing after another, each of them even more absurd than the last.

    Dear PM Modi, India is Already Land of Self-Employed, and It Ain't Working (Vivek Kaul's Diary)

    Aug 21, 2017

    Most Indians who cannot find jobs, look at becoming self-employed.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 22, 2017 (Close)