NEW DELHI: After falling for two straight sessions, the Sensex was looking strong today, having reclaimed its psychological level of 21,000 in intraday trade; but cautious stance from S&P statement saw the benchmark index plunging by 320 points from its day's high.
S&P reaffirmed India's BBB- rating, with a negative outlook, on Thursday.
The global rating agency warned of a likely downgrade in 2014 in case the new government fails to reverse India's low growth rate.
"We have noted a marked slowdown in India's real growth. This complicates the government's debt dynamics and ability to implement reforms," S&P said. "We will review India's rating after the next general election," S&P said.
After rallying over 200 points in intraday trade, S&P BSE Sensex closed 72 points lower, or 0.35 per cent, at 20,822.77. The index plunged 320.08 points from its intraday high of 21,142.85.
"In the past, the markets have seen correction post Diwali. The Nifty hit 6,338 on Diwali day in 2010, after which it corrected till 4,500. So, traders are cautious, thinking of the same trend to repeat in 2013," says AK Prabhakar, market expert.
"Traders and investor see 6,330-6,250 levels on the Nifty as a major resistance zone. And S&P's statement released earlier in the day added further pressure on the indices," he added.
He further said that if markets slip from current levels, then 5,980 on the Nifty is a very good support to buy fresh stocks for those who have missed the rally.
Is this a marginal blip in the rally or the trend in markets is pointing towards a reversal?
"Well, the first thing is that this is not looking like the kind of market which was heading to 7,000 by December. So, basically all the pieces of the puzzle are again setting up like they were in August, and the rupee is declining, flows are kind of petering out," said Ashwani Gujral, Fund Manager, Ashwanigujral.com.
"If this scenario continues, no support level is going to hold on. In a bull market, these are just frenzied buying and selling if you can term it this way, this is neither bear market nor a bull market," he added.
Gujral is of the view that it is time for investors or traders to just back off if they are a long-only investor. "And if you are comfortable with taking short positions, then today's closing confirms the fears that this market is now heading towards the downside, first target could be closer to 6,050," he said.
S&P reaffirmed India's BBB- rating, with a negative outlook, on Thursday.
The global rating agency warned of a likely downgrade in 2014 in case the new government fails to reverse India's low growth rate.
"We have noted a marked slowdown in India's real growth. This complicates the government's debt dynamics and ability to implement reforms," S&P said. "We will review India's rating after the next general election," S&P said.
After rallying over 200 points in intraday trade, S&P BSE Sensex closed 72 points lower, or 0.35 per cent, at 20,822.77. The index plunged 320.08 points from its intraday high of 21,142.85.
"In the past, the markets have seen correction post Diwali. The Nifty hit 6,338 on Diwali day in 2010, after which it corrected till 4,500. So, traders are cautious, thinking of the same trend to repeat in 2013," says AK Prabhakar, market expert.
"Traders and investor see 6,330-6,250 levels on the Nifty as a major resistance zone. And S&P's statement released earlier in the day added further pressure on the indices," he added.
He further said that if markets slip from current levels, then 5,980 on the Nifty is a very good support to buy fresh stocks for those who have missed the rally.
Is this a marginal blip in the rally or the trend in markets is pointing towards a reversal?
"Well, the first thing is that this is not looking like the kind of market which was heading to 7,000 by December. So, basically all the pieces of the puzzle are again setting up like they were in August, and the rupee is declining, flows are kind of petering out," said Ashwani Gujral, Fund Manager, Ashwanigujral.com.
"If this scenario continues, no support level is going to hold on. In a bull market, these are just frenzied buying and selling if you can term it this way, this is neither bear market nor a bull market," he added.
Gujral is of the view that it is time for investors or traders to just back off if they are a long-only investor. "And if you are comfortable with taking short positions, then today's closing confirms the fears that this market is now heading towards the downside, first target could be closer to 6,050," he said.
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