Sensex may settle at 3900 levels, say analysts

NetScribes/Salil Panchal

The worst is here to stay. A section of stock brokers, technical analysts and fund managers with leading private sector mutual funds are of the view that the downslide at the Indian stock markets will continue to be determined by external factors. Technical analysts are of the view that once the Sensex dips below the 4,200 level, it would breach the 4,000 level as well and finally settle at 3,900 levels.

The BSE sensitive index continued to slide on Tuesday due to external and internal factors - weakening of the US markets, higher crude oil prices and unwinding of broker positions in key scrips at the bourses.

The Sensex closed at 4,263, down 103 points from its previous close of 4,366.4. All the heavyweight tech stocks like Wipro, Satyam Computer, Infosys, Global Tele, HFCL touched their lower circuit levels during intra-day trading on Tuesday.

Marketmen are also of the view that the retail investor should remain away from the markets while the bloodbath continues. Once a degree of normalcy returns, there will be several attractive buys across the infotech, FMCG, pharma and auto sectors. Investors will also have to determine the risk-reward ratios in a weakening market.

Says R Sreesankar, chief investment officer, DSP Merrill Lynch Investment Managers, "The market continues to be under pressure with no clear support visible. The speculative interest is very high at the moment.''

Soumel Trivedi, chief technical analyst at Dil Vikas Finance, a leading NSE debt trading firm, expects the Sensex slide to continue till mid-October. "The Indian markets will continue to be impacted largely by external factors. If the Sensex breaches 4,200 level, the next level is 3,830. The mid-October period is extremely crucial for the Indian markets as it will determine the timeframe for the stock markets to bottom-out.''

According to Navin Agrawal, vice-president, SVS Securities, a leading institutional brokerage firm, the scenario may continue to be bleak in coming weeks. "The sentiment has also been affected due to reports that Zee Telefilms, Global Tele and HFCL could be shifted to the rolling settlement. If this happens, trading volumes will slide at these counters,'' he says.

Money

Market Impact

Tell us what you think of this report