Bloodshed on Dalal St: Is a sharp cut on cards?

The last two weeks have been pretty painful for the markets and today forbidden has happened. Amid extreme choppiness, the Nifty slipped below the psychological 6,000 mark for the first time in 15 sessions. It has shed more than 250 points in the last five sessions barring Monday's marginal rise. With this the index closed at 5,982.10 after falling 45.20 points and the Sensex closed at 19,872.15, down 110.98.

So how are experts reading this pull and push of the bears and the bulls? According to Dipan Mehta, Member BSE and NSE, these are critical levels and if the market were to trade 1-2% below these levels then that in itself would create another 4-5% decline. The markets, he says, are getting into a bit of a sideways zone and maybe this level of 6,000 and 20,000 may not be breached decisively.

?The corporate results so far have been quite interesting and generally been beating or at least meeting street estimates and that too is coming into the time when stocks have rallied into the earning season. As soon as the season draws to a close, the earlier support levels will be sustained and we may see the sideways movement or the market gathering some more momentum on the upside,? he adds.

However, Sushil Kedia of Association of Technical Market Analysts, feels tomorrow is a crucial day. ?If Nifty defies the major sell signals across Asian indices, or the sell signals in Asia get postponed, a rebound of close to 200 points is possible on the Nifty. But broadly speaking I am looking at 5,550 kind of levels to come in the next 8 to 10 days.?

The direction of the market will depend on two factors?results and the flow of liquidity, says Prashastha Seth senior vice president at IIFL Private Wealth. ?If the Federal Reserve goes ahead with the second round of quantitative easing, then one would probably see markets bouncing back. In case in liquidity flows out to maybe China or the Fed doesn?t do the kind of quantitative easing that people are expecting, one may see some more fall from these levels as well.?

?It is still a market where if you are a cautious investor you can take profit but if you are somebody whose mandate is to be invested in the market, you would probably still be invested in the market at these levels,? he advices.

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