Experts don't rule out the index testing its recent lows as global markets remain on tenterhooks; 8,200 on Nifty a key resistance.
India was no exception to the rout seen in global markets, led by China, in the past few days. India's leading indices, as well as mid- and small-cap stocks, saw a sharp fall amid high volatility.
Foreign institutional investors (FIIs) sold in huge quantities and at Rs 16,700 crore or Rs 167 billion of net sales, August has seen the highest monthly outflows since January 2008.
While domestic institutional investors (DIIs) have provided some support, it was not enough to curb losses.
Experts believe volatility is here to stay for some time, at least till China stabilises and clarity regarding the US Fed's interest rate move emerges.
At the same time, long-term investors could use the current situation as an opportunity to buy quality names.
Raamdeo Agrawal, MD & Co-founder, Motilal Oswal
The market is likely to be volatile for some more time, till the Chinese matter settles.
The recent upheaval might have been the first pop.
There is fear of more such pops in the China story.
Back home, companies' earnings remain weak and the apex bank is unlikely to cut key policy rates in the coming policy review.
So, the market is unlikely to touch new highs.
However, a significant correction in our market is ruled out, especially if the Chinese government is able to stem the market fall.
S Naren, CIO, ICICI Prudential MF
Since the beginning of the year, our view has been that markets might remain volatile till the first interest rate rise in the US is digested.
The current fall has more to do with global developments like the China slowdown and expectation of a meaningful slowdown in commodity exporting countries, owing to a crash in commodity prices, leading to deflation worries across the world.
India is actually a beneficiary of this and the FII selloff in the Indian equity market is an opportunity to buy for domestic investors. 2015 is the year for investing in equities with a horizon of three years and more.
Gautam Chhaochharia, ED & India Research Head, UBS Securities
We believe the markets will continue to be volatile, as the Fed rate rise is still ahead of us.
Stabilisation in the US and China markets is a pre-requisite for Indian markets to achieve some stabilisation.
These markets are still seeing big intra-day moves. However, we remain positive from a near-term perspective.
Our December 2015 target for the Nifty remains unchanged at 8,600.
We believe interest rate cuts (by RBI) will happen and that will surprise the markets.
On the other hand, growth recovery will be slow and muted.
So, we like financials, telecom, and the oil and gas sectors.
We are cautious on the power, capital goods, infrastructure and two-wheeler sectors.
Nirmal Jain, Founder & Chairman, IIFL Group
The markets have stabilised and we think it will consolidate from here. Market participants will watch for what the US Fed does on September 17 and will be taking cues from what is to happen.
Besides, how the monsoon pans out and any policy measures if taken by China or the Reserve Bank of India (RBI) might also have some bearing.
Yogesh Radke, Head of Quantitative Research, Edelweiss
The markets will remain volatile in the week ahead and the next series. We saw a strong opening and then selling pressure set in.
The two events lined up i.e. the RBI policy and the FOMC (US Fed) meet will keep market participants watchful.
The upside might remain capped at 8,200 levels, so one needs to be watchful on 8,100-8,150. On the downside, the support is at 7,700 levels.
There is a possibility that we might again retest these.
Siddarth Bhamre, Head,Equity Derivatives, Angel Broking
In the index futures, FII's have taken fresh longs. The FII data thereby will remain crucial for the markets and one that needs a watch, For the index, 8,200 remains a very strong resistance.
The consolidation might continue for a few days; however, one has to remain watchful. Though not immediately, the Nifty re-testing the lower levels cannot be ruled out.
