Sensex on Year's Lowest

The stock markets openned low on Monday this was another day of selling with no buyers having courage to hold on to their investments. The Sensex was hit by close to 420 points and the Nifty by 120 points. This Mid-cap and the small caps were the worst hit in todays markets, with many companies falling close to 10% and falling to their 6 month lows. This selling preasure is said to be created by the selling of the Mutual Funds by investors (both HNI
's and retail) who entered the market late or were slow at booking their profits at 12,000 levels. When they saw a fall of close to 20-30% in their investment they started to liquidate.

Global Fall

Globally the stock markets have all gone down in the past one month in both emerging as well as global markets. In the developed markets like USA markets have had a 10% correction compared to gains made during the bull run this is very substantial. Markets like Japan have also fallen heavly, with Nikkei falling close to 4%. In other asian markets like Korea Foriegn investor have net sold as much as $ 1 billion.In India last few trading sessions shows that they are net buyers in the indian share markets the FII have been the net buyers. And the Mutual Funds the Net sellers.

Selling Preasure

(A) The main selling is comming from the Mutual Fund companys that are heavily invested in the Mid-Cap sector. Because of redemption of MF's by HNI's and Retail investors the Fund is trying its best to sell off its shares. The problem is that the Mid-Caps are very illiquid and because of that they have ot selloff their core investments.

(B) The investors who followed the principle of buying into cheap low price shares afters doing value research are also the culprits. These investors who follow share markets analysts like Mr. Rakesh Jhunjhunwala purchase heavily in companies that undervalued through margin trade. Now they face the problem of meeting the settlement of their accounts. So, the Brokers are selling off the collateral shares or selling the share held by the investors in liew of the cash obligations.

Let us hope that the markets do not plunge further and the bull rally of the indian economy would continue.