Sensex falls again and again: where is the bottom

Indian markets are underperforming the global equities, for some obvious reasons on the local front, and investors stand confused today even though markets have already corrected by more than 6 per cent since Nov 9, when PM Modi announced demonetisation of Rs 500 & Rs 1000 note.

The situation in India is like an Income tax raid in every house of India and that has affected every investor sentimentally.

FIIs have been net sellers along with DIIs for past five to six trading sessions to the tune of almost $1.5 billion. This selling has caused markets to crack and investors are not sure if the markets have corrected enough.

Markets hate uncertainty and the situation on ground suggests it's almost impossible to quantifiy the damage, even though few ecomonists suggest a slippage in economy by about 0.5 per cent. Economists also believe the situation may take another six months to normalise.

Stranded trucks, unpaid workers and cancelled bills are only few of the problems faced by corporate India. Corporate operating profits may take a dip by almost 40 per cent as per few brokers.

The situation is of a liquidity crisis and the damage is in terms of sentiment which has turned negative. The quarterly results next time around will be closely watched by the market participants.

Investors with cash in hand may want to wait for the dust to settle before one starts deploying cash in a staggered manner in the markets.The current correction will present a decent opportunity for long term investors for sure.