Markets to see some bounce back after last session’s massive sell-off

The Indian markets despite some late hour recovery went through brutal sell-off in last session and major benchmarks lost over one and half a percent for the day, barely managing to hold their crucial support levels on continued Chinese worries. Today, the start is likely to be in green and good bounce back can be seen despite mixed global cues. Traders will be taking some comfort with Reserve Bank of India Governor Raghuram Rajan’s statement that India is affected by the 'same kind of jitters' impacting other world markets, but things will stabilize and people will look at stable emerging markets, including India.  Also, a private report has said that India's current account deficit may narrow to 0.5 percent of GDP in 2016 from 0.7 percent in 2015 owing to lower commodity prices, particularly oil. The report noted that export volumes are likely to remain sluggish on account of weak global demand, while import volumes would rise mainly due to strong domestic demand and real effective exchange rate appreciation. Power sector may see some bounce back, reacting to government’s new power tariff policy which allows 100 percent expansion by existing power plants, passing on levies to consumers and purchase of 100 percent electricity produced from waste. Testile stocks too may see some action, as the government has said that it has initiated the process of settlement of Rs 3,000 crore dues related to some ‘blackout and left-out’ cases which found no mention in the Amended Technology Upgradation Fund Scheme (ATUFS).

The US markets ended lower though the major averages clawed back major portion of early losses as buyers looked for bargains late in the session after the Labor Department reported that its consumer price index for December eased 0.1 percent month-over-month. The Asian markets have made mostly a positive start, with some indices rebounding sharply on speculation the selloff that took global equities to the brink of a bear market may have gone too far.

Back home, In a harrowing day of trade Indian markets suffered brutal sell-off, it was only the last hour recovery that helped the markets cap their losses otherwise Wednesday could have proved one of the worst trading day for the markets, after Sensex slumped nearly 650 points to slip below the psychological 24,000 mark for the first time since May 16, 2014. Bulls that were in action in last session were not even in picture today, with bears taking the command from the very beginning and the last session gains proved just a dead cat bounce, with markets resuming their declining streak after a day of break. The sell-off came after IMF painted a gloomy picture of the global economy and sharp slowdown in China. Though, IMF retained India's growth forecast at 7.5 per cent for 2016 and 2017 but lowered China's forecast to 6.3 per cent in 2016 and further down to 6 per cent in 2017 and revised down the global growth projection by 0.2 percentage point to 3.4 per cent for 2016.On the domestic front too, sustained capital outflows amid sluggish corporate earnings and domestic demand with weak trend on Asian bourses on renewed worries over global slowing economic growth and falling oil prices kept weighing the sentiments through the day. The delay in economic reforms and high volatility in global markets have led foreign investors to turn net sellers of domestic equities. The rupee weakness too contributed to the fall, rupee breached 68 per dollar mark for the first time since September 4, 2013 on continued foreign fund outflow. On the global front, while the US markets consolidated and ended mixed, the Asian markets resumed the slump, initiating global sell-off once again after crude oil dipped below $28 a barrel, later the European markets joining the sell-off too made a weak start. Back home, there was panic selling in the markets on concerns over the anemic global economic growth. Sensex that fell below 24,000-mark by noon after the feeble start of the European markets, made good recovery in last half hour of trade, recovering more than 200 points from its day’s low to protect the 24000 bastion. Some good earnings along with value based buying at lower levels supported the markets in last, however sustained selling pressure in heavyweights after a feeble start of the European markets, weighed on the sentiments and restricted any major recovery. The sell-off was brutal and broad based, with across the sectors selling pressure, with realty, metal, energy and banks suffering severe beating. Finally, the BSE Sensex slumped by 417.80 points or 1.71% to 24,062.04, while the CNX Nifty lost 125.80 points or 1.69% to 7,309.30.