Market Watch | Burying a dismal March series
The broader market collapsed even more with the mid-cap index losing 15 per cent and the small-cap index 23 per cent, writes Udayan Mukherjee.india Updated: Mar 27, 2008 23:03 IST
March’s was a disastrous derivatives series. Doubly so, because there were hopes that some of the January damage would be undone after the budget. Not only did that not happen, the Sensex fell 10 per cent in March and the Nifty 9 per cent. The broader market collapsed even more with the mid-cap index losing 15 per cent and the small-cap index 23 per cent. As we enter the earnings month of April, one hopes things will get better.
The most notable explosions this month in the futures segment were in stocks like Orchid and S Kumar’s, which lost half their market value. Among large-cap names ICICI Bank was down 24 per cent and most frontline metal and realty stocks were down more than 20 per cent. Fertlisers was the worst hit sector with most liquid names sliding 40 per cent.
FMCG stood tall with stocks like Hindustan Unilever, Dabur, Colgate and Marico generating returns of 5-8 per cent. After such underperformance, it is hardly surprising that the April series is opening with the starting open interest lower than the March series. There is no momentum in the derivatives market, now but neither is there any over-leverage.
Given that the Nifty is trying to establish a bottom in the 4,500-5,000 range, earnings will assume greater significance.
There have been widespread fears of extraordinary hits for many companies, so the market will watch very closely for dents.
If, however, earnings are on track, there could be more support for the base-building effort. But it is not just earnings; Inflation numbers will be watched closely. If wholesale inflation runs up above 6 per cent, nervousness will lead up to the RBI’s monetary policy meeting on April 29.
The US Fed meets on the same day and expectations of rate cuts will be more muted than the last time. Above all, investors across the world wait to see if markets do indeed put an intermediate bottom in place in April,. The March series has not ended on as hopeless a note as it started off on, let us see if this hope turns into conviction in April.
(Udayan Mukherjee is an Executive Editor, CNBC-TV18)