This is the market revolutionary change happened, achieved fame and many of us heard of it without knowing much about it.
Unfortunately, many new investors seem to be under a misconception that it is a type of mutual fund. A Systematic Investment Plan is not a type of mutual fund; it is a method of investing in a mutual fund.
Here's to coming to terms associated with mutual funds. There are two ways in which we can invest in a mutual fund.
Ø A one-time outright payment
If we invest directly in the fund, we just hand over the cheque and we get our fund units depending on the value of the units on that particular day.
Let's say we want to invest Rs. 10,000. All we have to do is approach the fund and buy units worth Rs. 10,000. There will be two factors determining how many units we get.
a) Entry load
This is the fee we pay on the amount we invest. Let's say the entry load is 2%. Two percent on Rs. 10,000 would Rs. 200. Now, we have just Rs. 9,800 to invest.
b) NAV
The Net Asset Value is the price of a unit of a fund. Let's say that the NAV on the day we invest is Rs. 30.
So we will get 326.67 units (Rs 9800 / 30).
Ø Periodic investments or SIP (Our present area of concentration)
This is referred to as a SIP.
That means that, every month, we commit to investing, say, Rs. 1,000 in our fund. At the end of a year, we would have invested Rs. 12,000 in our fund.
Let's say the NAV on the day we invest in the first month is Rs. 20; we will get 50 units.
The next month, the NAV is Rs. 25. We will get 40 units.
The following month, the NAV is Rs. 18. We will get 55.56 units.
So, after three months, we would have 145.56 units. On an average, we would have paid around Rs. 21 per unit. This is because, when the NAV is high, we get fewer units per Rs. 1,000. When the NAV falls, we get more units per Rs. 1,000.
Other important points relating to SIP-
§ Exit load - An exit load is a fee we pay at the time of selling the units, just like the entry load is a fee we pay when we buy the units.
Initially, funds never charged an entry load on SIPs. Now, however, a number of them do. We will also have the check if there is an exit load. Generally, though, there is none. Also, if there is an entry load, an exit load will not be charged. An exit load may be charged if we stop the SIP mid-way. Let's say we have a one-year SIP but discontinue after five months, then an exit load will be levied. These conditions will wary between mutual funds.
§ Periodic Investments - If we do a onetime investment, the minimum amount that we have to invest is Rs. 5,000.
If we invest via an SIP, the amount drops. Each fund has their own minimum amount. Some may keep it at least Rs. 500 per month; others may keep it as Rs. 1,000.
§ Frequency of investment - It would depend on the fund. Some insist the SIP must be done every month. Others give us the option of investing once in three months or once in six months. They also give fixed dates. So we will get the option of various dates and we will have to choose one. Let's say we are presented with these dates: 1, 10, 20 or 30. We can pick any one date. If we pick the 10th of the month, then on that day, the amount we have decided to invest in the fund has to be credited to our mutual fund.
§ Nature of payment - We can opt for the Electronic Clearance Service from our bank; this means the mutual fund will, as per our instructions, debit a certain amount from our account every month. Let’s say we have a SIP of Rs. 1,000 every month and we have chosen to invest in it on the 10th of every month. Under this option, we can instruct our mutual fund to directly debit our bank account of Rs. 1,000 on the due date. If we don't have the required money in our account, then for that month, no units will be allocated to us. But, if this continues periodically, the mutual fund will discontinue the SIP. We need to check with each mutual fund what their parameters are.
Alternately, we can give cheques to our mutual fund. In this case, they may ask for five Post Dated Cheques upfront with our first investment. Since these cheques are dated ahead of time, they cannot be processed till the date indicated.
§ Duration of investment – one have to state whether we want it for a year or two years, etc. If, during the course of this period, we realize we cannot continue with the SIP, all we have to do is inform the fund 15 days prior to the payout. The SIP will be discontinued. We can continue to keep our money with the fund and withdraw it when we want.
§ Type of funds that offer SIP - All types of equity funds (funds that invest in the shares of companies), debt funds (funds that invest in fixed-return investments) and balanced funds (funds that invest in both) offer a SIP.
Liquid funds, cash funds and floating rate debt funds do not offer an SIP. These are funds that invest in very short-term fixed-return investments. Floating rate debt funds invest in fixed return investments where the interest rate moves in tandem with interest rates in the economy (just like a floating rate home loan).
§ Tax implications - Let's say we have invested in the SIP option of a diversified equity fund. If we sell the units after a year of buying, there is no need to pay capital gains tax. If we sell if before a year, we are required to pay capital gains tax of 15%.
Let's say we have invested through a SIP for 12 months: January to December 2009. Now, in February 2010, we want to sell some units. The system of first-in, first-out applies here. So, the amount we invest in January 2009 and the units we bought with that money will be regarded as the units we sell in February 2010.
For tax purposes, the units that we sell first will be considered as the first units bought.
· How can be SIP is different and help full when compared to regular method of investing in mutual fund- When we buy the units of a fund, we may do so when the NAV is really high. For instance, let's say we bought the units of a fund when the bull Run was at its peak, leading to a high NAV.
If the market dips after that, the value of our investments falls and we may have to wait for a long while to make a return on our investment. But, if we invest via a SIP, we do not commit the error of buying units when the market is at its peak. Since we are buying small amounts continuously, our investment will average out over a period of time. We will end up buying some units at a high cost and some units a lower price. Over time, our chances of making a profit are much higher when compared to an one-time investment.
About Me
Monday, September 20, 2010
Friday, September 17, 2010
Asian equities edge upwards
Buying continues in regional benchmarks except China
Asian markets edged higher though shares in China continued to ease on liquidity worries. Commodity prices were stronger today as the dollar eased to a five week low against the Euro and risk appetite mostly stayed firm ahead of the weekend on steady cues from over night US markets. Economic data in the US, especially weekly jobless claims, continue to impress with unexpectedly small increase. US First-time Jobless Claims Slide To Lowest Since July, making the stocks encounter a poor manufacturing data in the form of the Philadelphia-area manufacturing index. The Dow gained 22.10 points or 0.2 percent to end at 10,594.83.
The Japanese stocks closed in green as exporters continued to gain from a frail undertone in the Japanese Yen and broad gains in the regional markets. Positive closing on Wall Street in the previous session also pushed up the index linked counters. The intervention of the Japanese monetary authorities to cap the freakish gains in the local currency against the US dollar have continued to keep the Yen lower, extending its drop from a 15 year high. The benchmark Nikkei 225 Index cloaked a gain of 116.59 points, or 1.23%, to 9,626, while the broader Topix index of all First Section issues added 7.38 points, or 0.87%, to 852.
The Australian market also gained, adding to recent gains as commodity prices stayed firm following the drop in US dollar and strong risk appetite. There was no activity on the economic front and traders mostly followed the commodity prices to push up the stocks ahead of the weekends. The benchmark S&P/ASX200 Index gained 33.60 points, or 0.73%, to end at 4,640 points, while the All-Ordinaries Index closed at 4,685, adding 35.10 points, or 0.75%.
Chinese markets plummeted though, adding to the latest losses as hefty selling in financials and heavyweight stocks hurt the sentiments. Traders continued to fret over the credit conditions in the economy and the recent revival in the inflationary expectations is also keeping the gains mostly limited in the stocks off late even as the rest of the world rallies. The Shanghai Composite Index fell for its third straight day to 2,598.7 points, after slumping nearly 2% in last session.
In Mumbai, the key benchmark indices regained strength in late trade to settle near day's high, with index heavyweights leading the rally. Firm global stocks and data showing heavy buying by foreign funds recently, underpinned sentiments. Hopes that the central bank may be nearing a pause in its current tightening cycle, also aided the rally on the domestic bourses. The BSE 30-share Sensex was provisionally up 200.52 points or 1.03% to 19,618.01. The barometer index today, 17 September 2010, struck a 32-month high.
In other markets, Hang Seng index in Hong Kong gained 1.30%, TSEC index in Taiwan added 0.72 % while Straits Times index in Singapore edged higher by 0.30%. Dollar eased to five week low against the Euro before cutting losses while DOW futures also come off after gaining 100 points in the session. Crude oil futures are back above $75, currently quoting at $75.04, up 47 cents on the day. Gold also rallied to fresh highs above $1280 per ounce.
Asian markets edged higher though shares in China continued to ease on liquidity worries. Commodity prices were stronger today as the dollar eased to a five week low against the Euro and risk appetite mostly stayed firm ahead of the weekend on steady cues from over night US markets. Economic data in the US, especially weekly jobless claims, continue to impress with unexpectedly small increase. US First-time Jobless Claims Slide To Lowest Since July, making the stocks encounter a poor manufacturing data in the form of the Philadelphia-area manufacturing index. The Dow gained 22.10 points or 0.2 percent to end at 10,594.83.
The Japanese stocks closed in green as exporters continued to gain from a frail undertone in the Japanese Yen and broad gains in the regional markets. Positive closing on Wall Street in the previous session also pushed up the index linked counters. The intervention of the Japanese monetary authorities to cap the freakish gains in the local currency against the US dollar have continued to keep the Yen lower, extending its drop from a 15 year high. The benchmark Nikkei 225 Index cloaked a gain of 116.59 points, or 1.23%, to 9,626, while the broader Topix index of all First Section issues added 7.38 points, or 0.87%, to 852.
The Australian market also gained, adding to recent gains as commodity prices stayed firm following the drop in US dollar and strong risk appetite. There was no activity on the economic front and traders mostly followed the commodity prices to push up the stocks ahead of the weekends. The benchmark S&P/ASX200 Index gained 33.60 points, or 0.73%, to end at 4,640 points, while the All-Ordinaries Index closed at 4,685, adding 35.10 points, or 0.75%.
Chinese markets plummeted though, adding to the latest losses as hefty selling in financials and heavyweight stocks hurt the sentiments. Traders continued to fret over the credit conditions in the economy and the recent revival in the inflationary expectations is also keeping the gains mostly limited in the stocks off late even as the rest of the world rallies. The Shanghai Composite Index fell for its third straight day to 2,598.7 points, after slumping nearly 2% in last session.
In Mumbai, the key benchmark indices regained strength in late trade to settle near day's high, with index heavyweights leading the rally. Firm global stocks and data showing heavy buying by foreign funds recently, underpinned sentiments. Hopes that the central bank may be nearing a pause in its current tightening cycle, also aided the rally on the domestic bourses. The BSE 30-share Sensex was provisionally up 200.52 points or 1.03% to 19,618.01. The barometer index today, 17 September 2010, struck a 32-month high.
In other markets, Hang Seng index in Hong Kong gained 1.30%, TSEC index in Taiwan added 0.72 % while Straits Times index in Singapore edged higher by 0.30%. Dollar eased to five week low against the Euro before cutting losses while DOW futures also come off after gaining 100 points in the session. Crude oil futures are back above $75, currently quoting at $75.04, up 47 cents on the day. Gold also rallied to fresh highs above $1280 per ounce.
Are insurance companies in India listening to the customers?
Life insurance companies in India are realigning their business models as the new regulations on ULIPs have shaken them out of their comfort zones.
The IRDA has done several things in response to mis-selling of ULIPs – increased the policy lock-in period of ULIPs, asked insurers to guarantee a certain return in some categories of ULIPs, and put a cap on the portion of premium that insurers can deduct as upfront charges.
ULIPs account for 50% of the business of life insurers. The cap on up-front charges means that ULIPs have become cheaper, hence more attractive for customers. Since insurance companies were using 40-50% of the first year’s premium as charges primarily for paying the agents, the new regime will mean lower commissions for insurance agents.
Insurance companies are worried about this. They are highly dependent on individual agents for selling policies, though many private companies have also been pushing bancassurance. So the focus of their marketing strategy, to a very large extent has been the agents rather than the end customers themselves.
The competitive intelligence efforts of insurance companies have centred around the channel strategies of their competitors – commissions on various products, discounts on group insurance schemes, promotional activities, etc.
A pitfall of concentrating on what the competition is doing, is that companies come up with me-too products. It is easy to spot this trend in India. Customers are forced to pick from a bunch of similar products, and pretty much rely on the advice of the agent to do so. Many of my otherwise informed friends have bought insurance this way.
As far as the end customers are concerned, the industry has focused on “educating” them. The rationale being that insurance penetration in India is low because consumers don’t understand insurance.
Perhaps the current shake-up is a good opportunity for companies to take a hard look at whether their products really meet the needs of Indian customers. And this is less straight forward that it seems. The imagination of most customers is limited by the products they have seen so far. Perhaps it is time to get to the need behind the need (which is indeed likely to be different for different customer segments), and offer appropriate innovative products to the customers.
If insurance companies can come up with offering that meet their customers’ need, they will not be dependent on the agents to push their sales.
The IRDA has done several things in response to mis-selling of ULIPs – increased the policy lock-in period of ULIPs, asked insurers to guarantee a certain return in some categories of ULIPs, and put a cap on the portion of premium that insurers can deduct as upfront charges.
ULIPs account for 50% of the business of life insurers. The cap on up-front charges means that ULIPs have become cheaper, hence more attractive for customers. Since insurance companies were using 40-50% of the first year’s premium as charges primarily for paying the agents, the new regime will mean lower commissions for insurance agents.
Insurance companies are worried about this. They are highly dependent on individual agents for selling policies, though many private companies have also been pushing bancassurance. So the focus of their marketing strategy, to a very large extent has been the agents rather than the end customers themselves.
The competitive intelligence efforts of insurance companies have centred around the channel strategies of their competitors – commissions on various products, discounts on group insurance schemes, promotional activities, etc.
A pitfall of concentrating on what the competition is doing, is that companies come up with me-too products. It is easy to spot this trend in India. Customers are forced to pick from a bunch of similar products, and pretty much rely on the advice of the agent to do so. Many of my otherwise informed friends have bought insurance this way.
As far as the end customers are concerned, the industry has focused on “educating” them. The rationale being that insurance penetration in India is low because consumers don’t understand insurance.
Perhaps the current shake-up is a good opportunity for companies to take a hard look at whether their products really meet the needs of Indian customers. And this is less straight forward that it seems. The imagination of most customers is limited by the products they have seen so far. Perhaps it is time to get to the need behind the need (which is indeed likely to be different for different customer segments), and offer appropriate innovative products to the customers.
If insurance companies can come up with offering that meet their customers’ need, they will not be dependent on the agents to push their sales.
Thursday, July 15, 2010
India picks symbol to rival the €£¥$
For those of us still fumbling to find the € symbol on our keyboards, today was a bad news day. Computer and mobile keyboards in India (and possibly around the globe) will soon be adding another new button - the rupee key.
Today a jury selected by the Indian government unveiled a new rupee symbol (pictured) to rival the internationally recognised the US dollar ($), the euro (€), the UK pound (£) and the Japanese Yen (¥).
The decision to create a new currency symbol reflects India’s aspiration to become a global player on international financial markets, in particular at a time when the Indian rupee has been strengthening against all major currencies.
The new symbol - or logo as some people have called it - also aims to distinguish India from its neighbours. Pakistan, Nepal and Sri Lanka all currently use the “Rs” abbreviation to refer to the their local rupee.
Earlier this year Pranab Mukherjee, India’s finance minister, said that the government “intends to formalise a symbol for the Indian rupee, which reflects and captures the Indian ethos and culture”.
So, in classic Indian style, the ministry organised an open competition to design the new symbol. The prize set for the winner was Rs250,000 ($5,352) in cash.
And the winner was…Udaya Kumar, a post-graduate student at Mumbai’s Industrial Design Centre, which is part of one of India’s elite institutes of technology (IITs).
For those who think it looks a bit like an ‘R’ with a line across it, don’t be fooled. According to the Indian Express the new symbol represents exactly what the finance minister was looking for.
“An amalgam of the Devanagari ‘Ra’ and the Roman capital ‘R’ without the stem…. [it] is based on the Tricolour and “arithmetic equivalence”. While the white space between the two horizontal lines gives the impression of the national flag with the Ashok Chakra, the two bold parallel lines stand for ‘equals to’, representing balance in the economy, both within and with other economies of the world.”
The verdict was given by a five-member jury and approved by the government cabinet’s today. However, the more important question is whether Indian citizens will like it. Beyondbrics hit the streets of Mumbai, India’s financial capital, with a copy of the new rupee symbol to gauge reaction to the currency’s novel design.
The (unscientific) beyondbrics vox pop verdict was generally a thumbs up for the new design - 6 out of the 10 people interviewed said they liked the currency symbol. The most common comment was that it merged India’s traditional and modern ethos.
Salman Borbhuyan, a perfume shop owner, said: “I like it because it has a traditional feel and a modern look. It’s a great mix.”
Another fan of the new “logo” Nitin Hadale, a young gym trainer, said: “It has an aggressive look and it’s very eye-catching.”
Two people agreed that the new symbol had a lot in common with the euro. However, the same two were split on whether the euro-likeness was a good thing.
A cigarette vendor, who didn’t want to be named, said: “I don’t like the fact that it looks like a euro…the symbol should be more Indian.”
However, Mukesh, a tailor, said that “the similarity with the euro is positive…it will make the rupee more internationally recognisable.”
What the majority of the country thinks about this new symbol is still a mystery - very few have seen the symbol or were aware that the government was planning to create a new one. An appropriate marketing campaign will be necessary to get everybody on board to support it.
From a geopolitical point of view, there are some serious doubts on whether the new symbol will help to elevate India’s status in international financial markets. Although the move certainly makes sense, and will bring some visibility to the Indian currency, it will take much more substantial and radical reform for India to enter the circle of global economic superpowers.
Monday, May 10, 2010
India good for cherry picking: Macquarie - Mark Matthews
What is your prognosis on Greece and Portugal? What is the impact it is having on the euro?
Mark: We had a lot of coordinated intervention over the weekend from the BoJ and Federal Reserve which was unexpected. I don’t think people expected those two big central banks to get involved. But I think trust in the system is still very very weak and the way markets in Asia have reacted this morning is much less of a rebound than anticipated. I would have thought markets would have been up 3-4%, but they are up only 1.5%.
So what is that telling you about equities as an asset class?
Mark: I think there is probably some short covering that needs to be done. So markets can go higher in the medium future. But longer term we already did so well last year, Asia doubled, the S&P went from around 700 to 1200 and I think even if the European crisis has not happened. Markets would still be going up very quickly today. You know China is the economic engine of the world and the Shanghai market is down about 15% in a year to-date. I don’t think markets are going to go up very much in between now and the end of the year.
Call on the euro at this point?
Mark: I think we have to read the details of the plan that is coming out to get more clarity. I don’t think the euro deserves to stage a really big rebound. Even if they do manage to contain the crisis and it doesn’t spread into other countries in Europe, the fact is that now the cats are out of the bag that they have this huge deficit. And they have to reign in these deficits by cutting spending and that’s going to mean less consumption, both government and personal consumption in those countries. And that won’t help the euro.
What does all this mean for liquidity coming into markets like India?
Mark: The interesting thing is that people are naturally attracted to the Indian market because it is one of the few large stock markets in the world where you can buy growth which is not correlated to the rest of the world because exports as a percentage of GDP are much lower in India than they are in most of the countries in Asia. But the irony is that its precisely because India’s economy growth is uncorrelated that the stock market attracts a lot of foreign portfolio money and therefore that money can easily be withdrawn when risk aversion increases as it has in the past two weeks. So the irony is that though India is a very protected economy from the rest of the world and it has very good domestic attributes, the stock market can suffer more than others in Asia because foreigners invested in it for its independent growth.
Mark: We had a lot of coordinated intervention over the weekend from the BoJ and Federal Reserve which was unexpected. I don’t think people expected those two big central banks to get involved. But I think trust in the system is still very very weak and the way markets in Asia have reacted this morning is much less of a rebound than anticipated. I would have thought markets would have been up 3-4%, but they are up only 1.5%.
So what is that telling you about equities as an asset class?
Mark: I think there is probably some short covering that needs to be done. So markets can go higher in the medium future. But longer term we already did so well last year, Asia doubled, the S&P went from around 700 to 1200 and I think even if the European crisis has not happened. Markets would still be going up very quickly today. You know China is the economic engine of the world and the Shanghai market is down about 15% in a year to-date. I don’t think markets are going to go up very much in between now and the end of the year.
Call on the euro at this point?
Mark: I think we have to read the details of the plan that is coming out to get more clarity. I don’t think the euro deserves to stage a really big rebound. Even if they do manage to contain the crisis and it doesn’t spread into other countries in Europe, the fact is that now the cats are out of the bag that they have this huge deficit. And they have to reign in these deficits by cutting spending and that’s going to mean less consumption, both government and personal consumption in those countries. And that won’t help the euro.
What does all this mean for liquidity coming into markets like India?
Mark: The interesting thing is that people are naturally attracted to the Indian market because it is one of the few large stock markets in the world where you can buy growth which is not correlated to the rest of the world because exports as a percentage of GDP are much lower in India than they are in most of the countries in Asia. But the irony is that its precisely because India’s economy growth is uncorrelated that the stock market attracts a lot of foreign portfolio money and therefore that money can easily be withdrawn when risk aversion increases as it has in the past two weeks. So the irony is that though India is a very protected economy from the rest of the world and it has very good domestic attributes, the stock market can suffer more than others in Asia because foreigners invested in it for its independent growth.
EU Impact: Sensex gains 560pts
Positive global cues (the nearly $1 trillion European Union bailout plan) saw the Sensex open with a positive gap at 16,799, which turned out to be the low for the day. Buying in heavyweights and metal stocks saw the index zoom to a high of 17,356 - an intra-day gain of over 585 points. The Sensex finally snapped a five-day losing streak and closed near the day's high with a gain of 561 points (3.35%) at 17,330. The Nifty was up 175 points at 5,194.
All the sectoral indices closed with gains. The BSE Realty index gained over 6%. Breadth was bullish - out of over 2,965 scrips traded, over 2,255 logged gains.
eliance Infra, which had dropped 7% on Friday after the SC ruling on the KG basin gas favouring Reliance, gained 8% to Rs 1,063. Metal stocks were in focus: Tata Steel and Hindalco advanced nearly 8% each to Rs 602 and Rs 175, respectively. Sterlite added 6% at Rs 756.
Heavyweight Reliance moved up 4% to Rs 1,080. M&M, Wipro, Grasim and ACC also closed with gains.
Cipla dropped 6% to Rs 320 after brokerges downgraded the stock to SELL on lower-than-expected Q4 numbers. Hero Honda was down marginally at Rs 1,886.
Debutant Talwalkar was the most active counter on the BSE with a turnover of Rs 289 crore followed by RNRL (Rs 166 crore) and Reliance (Rs 151 crore).
All the sectoral indices closed with gains. The BSE Realty index gained over 6%. Breadth was bullish - out of over 2,965 scrips traded, over 2,255 logged gains.
eliance Infra, which had dropped 7% on Friday after the SC ruling on the KG basin gas favouring Reliance, gained 8% to Rs 1,063. Metal stocks were in focus: Tata Steel and Hindalco advanced nearly 8% each to Rs 602 and Rs 175, respectively. Sterlite added 6% at Rs 756.
Heavyweight Reliance moved up 4% to Rs 1,080. M&M, Wipro, Grasim and ACC also closed with gains.
Cipla dropped 6% to Rs 320 after brokerges downgraded the stock to SELL on lower-than-expected Q4 numbers. Hero Honda was down marginally at Rs 1,886.
Debutant Talwalkar was the most active counter on the BSE with a turnover of Rs 289 crore followed by RNRL (Rs 166 crore) and Reliance (Rs 151 crore).
Thursday, May 6, 2010
Global cues hold key
The markets opened with a gap down and treaded lower mirroring the fall in the Asian markets. Anticipation of a gap down opening in the European markets only made matters worse. The markets hit intra-day lows immediately after the European markets opened weak.
Aggressive short-covering, along with emergence of some fresh buying in sharply battered stocks, led to a vertical upmove till the penultimate hour of trade. Thereafter, profit-booking at higher levels and apprehension of carrying forward long positions to the next trading day capped the momentum. The small decline in food inflation number against the previous week also provided some support.
Volatility ruled the roost as uncertainty over the Greece debt issues and its contagion effect on other countries added to the uncertainty.
Meanwhile, IT stocks witnessed profit-booking after yesterday's display of strong resilience while metals, capital goods, realty and power stocks continued to face selling pressure.
Though global concerns have not eased, negatives, to an extent, seem to be discounted. Global markets (especially Europe), too, can be termed as oversold to some extent if not bottomed out given the fact that they are now trading near their 200-day moving average (strong support levels). The downside thus appears to be limited unless some major adverse event unfolds.
Domestic benchmarks, too, made sharp rebounds from the day's lows and remained above the support levels by a comfortable margin. One would thus do well to keep a close watch at the long-term support levels (200-day moving average for Nifty @ 4950) and start accumulating some quality stocks that seem to have been severely battered.
Aggressive short-covering, along with emergence of some fresh buying in sharply battered stocks, led to a vertical upmove till the penultimate hour of trade. Thereafter, profit-booking at higher levels and apprehension of carrying forward long positions to the next trading day capped the momentum. The small decline in food inflation number against the previous week also provided some support.
Volatility ruled the roost as uncertainty over the Greece debt issues and its contagion effect on other countries added to the uncertainty.
Meanwhile, IT stocks witnessed profit-booking after yesterday's display of strong resilience while metals, capital goods, realty and power stocks continued to face selling pressure.
Though global concerns have not eased, negatives, to an extent, seem to be discounted. Global markets (especially Europe), too, can be termed as oversold to some extent if not bottomed out given the fact that they are now trading near their 200-day moving average (strong support levels). The downside thus appears to be limited unless some major adverse event unfolds.
Domestic benchmarks, too, made sharp rebounds from the day's lows and remained above the support levels by a comfortable margin. One would thus do well to keep a close watch at the long-term support levels (200-day moving average for Nifty @ 4950) and start accumulating some quality stocks that seem to have been severely battered.
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