New Delhi: The share market shattered after the Reserve Bank of India credit policy announcement on Friday. The Sensex broke the 9,000-mark for the first time since June 14, 2006 and the Nifty also slipped below 2,700. When trading ended on Friday, the markets had fallen by 1070.63 points to close at 8701.07.
CNN-IBN Stocks Editor Udayan Mukherjee analysis the trends and answers questions on the markets.
Question: No words for a day like this Black Friday. Only two questions: Why? And how much further?
Udayan Mukherjee: This is completely unprecedented. The quantum of stocks that fell leaves one completely numbed. Stocks like Unitech fell 50 per cent today after the damage they have seen already. Suzlon fell 40 per cent and I am not talking about penny stocks, but multi-million dollar market capitalisation stocks which are falling 30, 40 or 50 per cent in a single session. It is absolutely numbing. I can only imagine the kind of sentiment going through the minds of people who are running stock portfolios in the market. But this is not a local problem, it is a global problem. Many of the Asian markets were down 9-10 per cent, many of the European stocks were down 10 per cent while we were trading. The US markets went on the freeze on the futures well before they started trading. So this is something which is absolutely global in nature and as long as this panic does not subside there is no point talking about a bottom. So are we oversold? Yes it seems so. Are we close to the bottom? Yes it seems like to me but that does not seem that this falling knife is going to get stuck any time soon.
Question: We're expecting third quarter results next week and many job cuts are being announced. We have seen signs of the recession at least in the UK. Is that what's going to dominate market sentiment now?
Udayan Mukherjee: It's already out in the open, it is well a publicised fear. But I think the eye has moved on from earnings right now into the global liquidity situation because we are seeing relentless selling across emerging markets and many funds which are going bust or need to pull out money from any kind of asses in this world. That is one big problem but the other big problem is that newer skeletons are tumbling out of the global closet. Last couple of days you have seen a Russian downgrade, you have seen problems of sovereign defaults potentially coming out of Argentina. Global currencies have been collapsing. The UK is currently heading into a recession so you don't know what will hit you next. Credit problem or a housing problem in the US? It's become much bigger.
Question: You spoke of the market being oversold. I am going to be bold here and ask - three years from now would I or an ordinary investor really regret not having bought into the market at these levels. Are there stocks you would recommend be bought at least in the blue chips?
Udayan Mukherjee: If you would ask that if I would stick my neck out and start investing in the market today I would probably say I would start but very, very slowly if I had to and then do it very gradually in the next six months. The problem with people is that its all or nothing. the problem is that they wake up one morning and they say that my prices have arrived so I am going to put whatever I have into the market one fine day that I would think is a cardinal mistake. You would have to do it very slowly because you don't know where the bottom is. So if you take a call that 8000 somewhere is my comfort level then you put in a little bit of money at that and then if the market continues to fall then you slowly buy downwards. But yes there is a lot value in the market right now. I just can't understand where the technicals are going to end the market I mean the liquidity elements will lead to a bottom in the market but I think the time is coming. It looks like the darkest hour in the next few days and probably if you do put money in the next few month judiciously then in the next three years you might probably make a lot of money. I certainly hope so but I could be terribly wrong.
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