What is your market outlook for 16 October after the sharp correction of 1000 points in Sensex on Thursday?
Answer
Answer
You are right that the Sensex did see a sharp correction on Thursday, losing over 1000 points in the process. Interestingly, IT and banks saw a heavy sell-off. Based on recent IT numbers, it looks more like a reaction to the global sell-off following fiscal stimulus worries.
Traders may get jittery but the 8-10% correction in IT stocks actually gives a margin of safety for investors, which they can make the best of. The choice is yours. Long term investors can use dips to buy into quality IT stocks. Friday may be volatile due to week-end issues.
Foreign investors were net sellers to the tune of Rs.605 crore while DFIs sold Rs.808 crore on Thursday. Considering the scale of the fall on Thursday of over 1000 points on the Sensex, it does look like the impact was due to leveraged positions being unwound.
Dow and NASDAQ opened weak after weak jobs and manufacturing data. However, these indices recovered sharply in the second half of Thursday. European markets were down over 2% but SGX Nifty appears to be trading about 60 basis points higher.