Friday, February 5, 2010

Sensex to plunge in early trade on global woes

Indian markets are expected to plunge opening on bell, as fears of slowing growth return to the market. Expect the benchmark index to lose more than 2 percent or more than 300 points for the day. One can expect selling across the board as funds might dump their holdings and lock their profits.

On Wall Street stocks crashed under the growing belief that the global economy is weaker than many investors expected and likely to stop companies from hiring.The Dow fell 268.37, or 2.6 percent, to 10,002.18. The Dow has fallen 723 points, or 6.7 percent, since closing at a 15-month high of 10,725.43 on Jan. 19.The broader Standard & Poor's 500 index fell 34.17, or 3.1 percent, to 1,063.11.

Asian stocks are off to a terrible start taking cues from the performance of U.S. markets. Both Japan's Nikkei and Australia's ASX 200 lost more than 2.5 percent for the day. Commodity stocks were hit hard this morning.

As expected, Metal and Realty stocks were crushed yesterday, and we might see a repeat today. expect the sectoral indices to lose more than 3 percent for the day. We advice investors to exit Auto stocks like Tata Motors, Mahindra and Maruti. Sell Hindalco, Tata Steel, Sterlite Ind and Sesa Goa, as these stocks might see a free fall today.

Gold futures fell sharply along with other metals and commodities on Thursday, as concerns about economic growth and debt woes in Europe fueled a rally in the dollar. Gold for April delivery slumped $49, or 4.4%, to finish at $1,063 an ounce at the New York Mercantile Exchange.

We recommend investors to book profits in the following stocks, Shree Astha Vinayak, which has gained over 80 percent this week. Dwarikesh Sugar, which has gained over 70 percent over a week. Also exit shipbuilding plays like ABG Shipyard and speculative counters like ThinkSoft, Resurgere Mines and PVP ventures.