I-Day saves Sensex from global dip | business | Hindustan Times
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I-Day saves Sensex from global dip

Independence Day saves Dalal Street from a bloodbath. Indian equities escape the fall as bourses were shut to mark the end of British rule 60 years ago, reports Vyas Mohan.

business Updated: Aug 15, 2007 20:13 IST

Independence Day saved Dalal Street from a bloodbath on Wednesday. Even as indices across the Asia-Pacific region dropped as fears linked to US sub-prime mortgage loans mounted, Indian equities escaped the fall as bourses were shut to mark the end of British rule 60 years ago.

“It is good that the markets were closed. This gives time to absorb the shock. It may not be as bad a fall tomorrow,” said Sandeep Shenoy, strategist with Pioneer Intermediaries. But with European indices edging lower in opening trade on Wednesday, Indian stocks may take a hit on Thursday.

Market experts, however, feel Indian bourses have closed on a stronger note when compared with the global markets and, thus, a fall would be followed by a quick bounce-back.

“All major global indices are either close to or below their 200-day moving averages, which is a sign of weakness. However, domestic indices are holding above that decisive figure. Thus, though the market may fall in line with the global trend on Thursday, a fast recovery can be expected,” said Alex Mathew, head of research of Geojit Financial Services.

A cautious stance by investors ahead of the trading holiday on August 15 could help the markets mitigate the overall negative sentiment. Investors were seen closing down their long positions (buy in futures) on Tuesday ahead of the trading holiday. A low count of long positions may not exacerbate falls as there are not many investors caught in the wrong zone of the market and need to go short (sell in futures) to close their positions.

However, Andrew Holland, managing director, DSP Merrill Lynch India, has a different opinion. “There will be more volatility ahead as more news from the US sub-prime market flows in. The correction till now is based only on facts that the markets know. There may be things that the markets do not know yet. An appropriate re-pricing in stocks can happen only after all the factors are known,” he said.

A fall in the US and European markets on Tuesday triggered a meltdown across Asian indices on Wednesday, with the Jakarta Composite Index of Indonesia dropping 6.44 per cent, the most since the 1997-98 Asian economic crisis.