The Hindu Business Line : ‘Recovery may have come as a surprise’

Kolkata, Sept. 30 A crisis management of sort worked on the Dalal Street on Tuesday even though Wall Street was yet to find a short-term solution to the long-term problem.

According to market sources, substantial buying was there in ICICI Bank, which was subject of hammering in the last couple of sessions, and also in a few other bank counters. A directed short covering exercise by local players and a quarter-end NAV propping up measure by mutual funds have also saw postponement of major selling.

Domestic buyers

“Local institutions, led by LIC, proved there are buyers in the market. This ebbed the expected sell-off and paved way for a recovery. At the end of the day, the Indian equity market performed better than the other Asian markets,” said Mr Arun Kejriwal of KRIS.

According to Mr Ajit Day of Dayco Securities, the reassuring words from the SEBI Chairman also helped the market hold against a potential panic temporarily.

But is this a one-day wonder when markets the world over are collapsing?

“The recovery may have come as a surprise. After all, tomorrow is another day and the day after tomorrow market is closed. Friday is a long way off. By then the 123 Nuclear Deal would be a reality,” Mr Kejriwal added.

Positive outlook

According to Mr Gul Tekchandani: “Nobody can rule out the possibility of renewed fire-fighting measures for the fallen Wall Street stars by the end of the week. But more importantly, the Wall Street crisis may throw up positives for India. Crude oil is likely to fall. Inflationary pressure may be eased further. Interest rates hike could be spared. Indian equities are cheaper now, considering the long-term positives. The market may remain volatile, but the net overall direction may be northward.”

But if there was a bloodbath on Wall Street on Tuesday, would a reversal be averted on Wednesday on Dalal Street?

Mr V.K. Sharma of Anagram Securities felt the chances were brittle.

Mr Day also felt if the Wall Street situation aggravated it would be difficult to balance a sizeable liquidation by FIIs in the short term.

Mr Ajay Jaiswal of Microsec, though, agreed that quite a few positive points might be stacked up in the course of the current developments, he was unsure about how the negatives would play out in the next few sessions.

According to Mr Amitabh Chackraborty of Religare, Tuesday’s move does not raise confidence.

“It is lacking liquidity and depth. A large-scale sell-off by overseas investors, particularly hedge funds and participatory-note holders, may possibly force indices down this week,” he added.

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