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POSTED BY ON November 17, 2010 7:06 pm COMMENTS (10)
Why markets fell so much in last 1 week ?
Does anyone has idea why markets starting falling suddenly so much in past 1 week ? The biggest reason I came to know was China’s interest rate hike
Any one else ?
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As a whole apart from the usual stories available the market is overvalued and the FII are gradually selling off and booking their 5% profit 😉
Plus christmas and new year are coming time to spend those green bucks 😀
It is impossible to explain each and every 2-5% move in the markets. Just trying to link it to a big news event does not make any sense and you cannot ever predict it for any future market flip-flop.
I don’t understand the fundamentals. We ignore them in bullish market and trying to “make” them in bearish mode. Then, we see interest rates, inflation, EURO problem etc. on 70mm screen. But technically, Nifty chart has broken some crucial levels of support & I expect Nifty to be around 5563 in coming days. Those who understand technicals, just watch weekly chart of Nifty on Ichimoku.
Hope it will help you.
@Manish
Many readers pointed out chinese interest rate hike to tame inflation and persisting euro debt crisis which i feel is important for the slump. Apart from this, Industrial production index for the last couple of months is bit lackluster and there is general FIIs trend of profit booking in the year end.
Whatever the reason may be, i feel it is not generally advisable to enter/stay in market beyond PE of 25.
what u guys think?
I think china interest hike and korea sell offs are just the excuse that sensex was looking for a fall because it had rised to new highs in a very short time. Consolidation was expected in the market and if you see old market trend after every diwali rally market tends to cool off for the next 2-3 weeks.
Having said this I also feel that India story is intact and these dips are the perfect time for investing in value stocks if you have missed the ride early. But make sure research thoroughly before putting in your hard earned money .
Is its partly because of our Chennai Super King 🙂 (In Tamil Raja means King)
I think overall global sentiment is pretty low. Ireland has a new debt story. Interest rates in India too are entering the higher end now. They might hike even more if inflation doesn’t come under control. In a way, China’s interest rate hike is also a strong signal from their side that inflation is not something they will simply overlook in pursuit of growth.
By the way, Manish, do you still stand by your feeling that markets will go up to PE 30?
Ram
I am in no way saying that Nifty PE will cross 30 , I am just putting up a question , if Nifty PE can go from 20-22 earliar to 27-28 in 2008 , then why not 30 this time , human irrationality has no limits afterall 🙂
Also one of the reasons which might contribute a lot in this fall is pure “profit booking” 🙂
Manish
Manish, I know you’re not saying that PE will go to 30 in your question. I just remembered this from one of your past comments and wanted to know what your latest view is :).
About profit booking, it could be the case. However, sentiment could turn negative and lead us back to a serious correction. Of course, there is never an immediate correction where suddenly markets lose 40%. It is always a gradual and painful process 🙂 which has some minor bouncebacks now and then.
China’s interest rate hike being the primary reason, also Ireland is the new European County to report crises and there are talks within European Unions for a possible bail-out package. These news will not go well with FIIs and they will be compelled to withdraw from the Indian markets.
Rakesh