Breach of earlier 2008 lows a major setback

Here is a verbatim transcript of Udayan Mukherjee’s comments on CNBC-TV18.

We saw that as 12,000 broke, there was a little bit panic in the market but the bigger break has happened earlier - the breach of the earlier 2008 lows which held after four attempts and those slicing through - that I think was the more important breach. So these are psychological levels which can come and go without much resistance - they are optical and psychological in nature but 12,500 which held out for so many months and 3800 which had held out for the Nifty - those getting broken so conclusively I think is the stuff which is leading to a lot of panic in the market, because now the serious downsides have opened up.

The earlier assumption that the market would still hold out in the range of 3800 to 4500, that notion has been broken down completely and therefore I think stop losses have got triggered but the bigger factor is the kind of large institutional delivery-based selling which we are clearly seeing in many largecap names and once that becomes the play where institutions are actually selling heavily - they don’t have so many levels in mind. Levels only come into play when there is not huge institutional activity and the market is actually being moved around by traders and large domestic players who are moving with technicals.

But I think the kind of selling that we are seeing from the last few days from global institutions - those guys I think don’t have any respect for either 12,500 or 3800 or Rs 1800 for Reliance - they just want to liquidate and take out a certain amount of cash from the markets, which is why the levels have become quite les important, but the one level which certainly affected sentiment quite a bit was the breach of 2008 - the early lows of 3800.

Source: MoneyControl