The Sensex lost 44 points today to close at 2868. The market closed near the intra day low (2854), reflecting the fact that the selling pressure continued right through the day; there is no sign of recovery as yet. This indeed should come as a surprise as the many other markets in the world have recovered including the Nikkei. The Russian impact was only perceived to be severe on Korean stocks. That there was a continued sell off in Indian stocks, on top of the considerable reaction on Monday itself, reveals new cracks in the fabric of Indian stocks.Major pivotals continued to slide down with increase in volumes. The overall volume of the market trade went up by 25 per cent over the previous day. There were serious slides in Reliance Industries, HLL, SBI, SAIL, HPCL and Hindalco to name a few. That Reliance should slip down by 3.84 per cent, HPCL by by 7 per cent, MTNL by another 4.99 per cent must have sent a chill down the spine of all investors.
Yesterday it was believed that the market slip was a result of the winding down of positions, rather than short selling. But a continued downward slip with a further spurt in volumes is somewhat perplexing. With the recovery of other global markets, even as the day's trading was on, one would have expected caution to prevail. But that was not to be. A detailed analysis would be required to find out whether built up positions were indeed that huge; If speculators have become bold to press short sales to the extent that was seen today, that would indeed be a totally new show of power by the bear lobby. More data is needed to corroborate.
Now that the index had gone down without resistance, it is tempting to look for the testing of 2826 level, which is the low level of December, 1996. If the index falls through this level convincingly, we would have entered a serious bear market.
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