on Tuesday

on

Tuesday

Wednesday

NEW DELHI: Dragged down by a massive fall in the stock market , where the benchmark Sensex plunged over 800 points, total investor wealth tumbled by over Rs 2.75 lakh crore on the Bombay Stock Exchange The S&P BSE Sensex recorded a market capitalization of Rs 96,74,705compared to market capitalization of Rs 99,49,718.82 on January 5, which translates into a fall of Rs 2,75,013.82 crore or 2.7 per cent. Benchmark indices slumped more than 3 per cent each, posting their biggest daily loss since the rupee crisis in 2013 as a continued slide in oil prices hit the emerging markets The BSE index declined 3.07 percent and the broader NSE index 3 percent, their biggest daily percentage fall since September 3, 2013, when the rupee was still reeling from its worst market turmoil since the 1991 balance of payment crisis, Reuters reported.The major news which led to sell-off in global markets was the announcement of crude oil prices, which slipped below $50/barrel, to hit their fresh 5-1/2-year lows.The Euro also hit its lowest point against the US dollar in more than 8 years, trading at just 1.19 USD/Euro. There is some speculation that with the US markets improving, the Euro could very well hit the previous impossible rate of one Euro/Dollar if crude oil prices continue to weaken.I still do not believe that the bull market is yet rattled because we have had this kind of fall a couple of times before as well. At that time it had tested 7,900 on the Nifty and then came back with a bang.Global events may overtake this. So obviously fears of a Greek exit from the euro zone, the euro falling to a nine-and-a-half year low, oil going to crazy lows, talk of high yield bonds falling are enough gloom and doom theories.But there is our story which is still pretty robust, pretty alive, the government is going a whole lot to keep the reform going and then this fall in oil is absolutely great news for us.I still think these extreme sorts of corrections are part of any bull market and I will be proved right that the market will come back with a bang.In an unprecedented, historic day, the BSE Sensex saw its biggest one day fall in almost 7 years and 8th largest drop of all times. With a 3.07% fall, the Sensex dropped 854 points from yesterday’s close at 26,987- 10 points away from the 864 point drop the Sensex witnessed on 23rd January, 2008.Although in normal circumstances when a massive rally or crash happens, a single event can usually be pinpointed- today's fall in the markets seems to be coming from an amalgamation of multiple events and circumstances, both domestically and internationally.There has been some amount of long positions getting squared off as far the Nifty futures are concerned. More importantly, the put protection that has been characteristic even with the long bias is concentrated at 8100 and 8000 strikes for Nifty.We think that support should come in the next day or so at 8100 based on the 8000 strikes. However, it could be about 8050 at the worst.On the Nifty, I will look to take a long position at 8100-8050 because of the capitulation index that we track on a real time basis has spiked significantly. It behaves conversely with the index level and we are looking for the market to actually bottom out in the next session or two. So we will be focused on looking at building a long side on the Nifty by middayThe bulls have been caught on the wrong foot after a very-very long time and there will be further unwinding. So this may not be the end of this fall and you really cannot stay isolated when the rest of the world markets are falling.We should remember that oil price fall. I mean to a certain extent it is good for India, but beyond a certain point it affects the equilibrium and because of which clearly you have the oil economies suffering. This also points to the fact that the overall world economy is slowing down. So you really cannot ignore this and India really cannot be isolated.