A Day of wild swings
What a sequel to Manic Monday. Call it turbulent Tuesday. The Sensex closing may not reflect it but it was a numbing experience to be in the market.india Updated: Feb 14, 2007 03:06 IST
What a sequel to Manic Monday. Call it turbulent Tuesday. The Sensex closing may not reflect it but it was a numbing experience to be in the market. It swung wildly, from a scary start in the morning to relief at noon and then a savage dip again towards the end. Fittingly the Nifty closed flattish. The bulls and bears both had their noses bloodied but shared honours for the day. Short-term traders though would have got stopped out both ways and incurred heavy losses. They shouldn't have initiated directional trades.
The market was abuzz with talk of some heavy Nifty futures sales pressed by large institutional players. Futures positions continued to see unwinding in counters like Hindalco, TTML and India Cements. The unnerving bit about trade was the extreme volatility on large volumes. That imparts a feeling that prices haven't stabilised yet. The Nifty did not break 4000 for the day; bullish traders will hope that level provides some support this week. Given the recent history of such sharp cracks, which have tended to be shortlived, it’s too difficult to determine whether this is just a sharp pullback or a much bigger downwave.
Cracks are opening up in new clusters everyday. Even as real estate stumbles the entire construction sector is awash with red. IVRCL, Nagarjuna Construction, Hindustan Construction all sold off on Tuesday. And cement, led by Gujarat Ambuja has been correcting as well. These were the market leading segments of 2006 and thus their sharp slides do raise a few question marks. Of course Hindalco and Tisco continue to see more downgrades and consequent selling pressure.
In the midst of this volatility there is a new listing today. Cinemax, priced at 155 was oversubscribed 42 times. It has a big multiplex footprint in Maharashtra and is in gaming as well. Valuations, at 14 times FY08 earnings, seem more attractive than peers like PVR and Pyramid Saimira. It should list in the zone of 180-200. Then the overall market environment will take over.
Expect some more choppiness today. Trading is not recommended for the fainthearted.