Can you share with me your Nifty and Sensex view for 08th September? Do you see the Nifty correcting after the fall in Dow yesterday?

The markets were lacklustre through the day on Tuesday and closed about 15 points lower on the Nifty. The US recovery is likely to be delayed according to latest reports and that tended to weigh on the markets. However, that would also mean that the taper of liquidity is likely to be delayed by the US Fed and that gives room for comfort to Indian markets.

One quiet trend has been that the action is again shifting to defensives in the large cap and to mid-cap stocks. On Tuesday, in the midst of weak markets, the mid-cap stocks performed well. They have been doing a lot better in September compared to August. However, the VIX continues to hover around 15 levels and that does open downside risks on the index.

Foreign investors sold Rs.146 crore in equities on 07th September while domestic institutions sold Rs.137 crore. Tepid volumes hint at a cautious approach of institutions. On Tuesday, the Dow Jones index closed with 269 point loss on weak recovery expectations. Europe is down but the Nifty appears to be showing strength in early trades at SGX.

That brings me to the second part of the question, will the fall in the Dow impact the Nifty. While the early trades look positive, I would believe that there would be an impact. While it is true that the taper would get delayed, the weaker economic recovery could have larger repercussions. If Dow futures continue to be weak, it is likely to impact the Nifty too.