Who will bell the cat?
The new way of investing in Indian tech stocks is to first see the previous day's NASDAQ. If it has fallen which happens frequently nowadays, start selling Indian tech stocks. The US indices have gained as much eminence as our local indices and Indian technical analysts are often more busy forecasting the US markets than the Indian market.
The tech-heavy NASDAQ Composite Index and the blue chip Dow Jones Industrial Average (DJIA) lost heavily in the worst ever bloodbath on Friday. The DJIA lost 600 points and the NASDAQ fell by over 350 points - the single biggest day drop for both the indices.
Obviously, this will have a dampening effect on the Indian markets on Monday, and the markets should open with a huge downside gap. How long will the slide continue? Nobody has a clear answer but here is what the latest buzz from Dalal Street.
Delinking from NASDAQ
Every market player is saying that someday we will get de-linked from the NASDAQ. Our tech companies are not like NASDAQ's Internet and biotech companies, but are healthy, profit-making and showing robust growth. But nobody was complaining in the recent run when our market was taking cues from the US markets for direction. So if you go with the good, you should be prepared for the bad, says one fund manager.
Postive outlook
So, why are we facing the music along with the NASDAQ. Most of the fund managers and market players say that at current levels, the valuations in the market are attractive, especially in the old economy stocks. Plus, the fear of sales by domestic mutual funds and foreign institutional investors (FIIs) are unfounded. If one checks out the institutional figures being released by the SEBI, it shows that FIIs have been net buyers for the whole of this month to the extent of Rs 2,002 crore. Domestic mutual funds are also buyers but do not buy and sell as aggressively.
Who will bell the cat?
Most funds and operators are waiting on the sidelines waiting for the market to stabilise. At this stage, the market is waiting for leadership. But it is a classic case of who will bell the cat first and whether it will happen next week. All it takes is a few funds or a big-ticket investor like Ketan Parekh to start buying aggressively and the rest will follow. Most market players are bullish on the prospects of the old economy. In fact, one fund manager says that many old economy stocks are virtually going free but there are no buyers. Another says he will be buying some of them next week. But there could be further pain in tech stocks next week. One silver lining for the tech stocks is the US looking at removing the cap for H1-B visas for the next three years.
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