Correction mode likely to stay

Investors would look for opportunities to move into better performers.

The market went into a correction mode last week after indicating in the second half of October that it might make such a move. This week too, Dalal Street may witness a downward trend. Some observers said the Sensex may plunge to 14,000 level in the short-term.A marked increase in profit booking by a section of FIIs has changed the ball game, according to investment advisors to overseas funds.

See acceleration in emerging markets led by China: JPMorgan

Adrian Mowat, Chief Asian and Emerging Markets Equity Strategist, JP Morgan, sees signs of stabilization in developed economies and acceleration in emerging market economies led by China. "China was the first big country to move to pro-growth policies. We have seen major emerging markets move to pro-growth policies."

He advices investors to get into early cyclical markets like Korea and Taiwan, sell defensives and get into building materials. "Some cement stocks are doing really well in India and China at this point."

The US Federal Reserve released the methods it used to conduct stress tests of the biggest US banks, but stopped short of any details that signalled how much new capital regulators will demand. Commenting on the same, Mowat said the stress test is applicable on top 19 banks but the real problem in mid-tier banks. "I think investor focus will be on the actual results of the stress test, which was almost a non event for US markets. I am intrigued by the market’s under reaction to the stress test."

Source: m o n e y c o n t r o l . c o m

Sensex hits 3-year low as negative sentiment rules

The benchmark index Sensex fell almost 3 per cent and closed at 8,197, a three-year low, while the broader 50-stock Nifty was down 2.59 per cent, closing at 2,576.

Even the seven-year low inflation rate of 3.03 per cent for the week ended February 21 failed to boost the market sentiment, said analysts.

Reasons for the fall

• Weak Global Equity market
• Continuous FIIs pullout
• Widening Fiscal ficit at 6% of GDP
• Fears of sovereign downgrade by S&P and Moody's

Measures that didn't help

• All the three stimulus packages
• Even the recent sop to export sector
• The US stimulus package
• Rate cuts by central banks across the world.