India's not immune from turmoil: Udayan

New Delhi: The Sensex recovered 587.6 points and Nifty 184.2 points from an intraday low of 10,740.76 and 3329.45, respectively. The Sensex closed at 11,328.36, down 366.88 points or 3.14 per cent on Wednesday. The Nifty fell 92.95 points or 2.58 per cent, to settle at 3513.65.

All indices closed in red. Major sell off was seen in FMCG, technology, banking and capital goods stocks. Midcap and small cap stocks are worst hit. Finance Minister P Chidambaram’s statement was also helpful for markets a bit.

Managing Editor, CNBC TV18, Udayan Mukherjee analysed and answered questions on the turmoil in the markets.

CNN-IBN: From all the moves that you have seen till date, globally and domestically, are they going to bring some relief, temporary relief?

Udayan Mukherjee: All global markets which have got sold or hammered so badly over the last four or five sessions they might see some kind of temporary relief however temporary it might be. The ECB, US Fed has cut off interest rates pretty much across the board. So there’s the hope that that will stem the panic a bit.

I don't think the market is in any mood to take assurance from any ministers or economists at this time, however because of the severity of the global problems. i don't think it is true to say that India is insulated from global turmoil.

Yes our banking system might be safe but that is not to say that India's growth and prospect and stock markets are not being affected by the global turmoils that we are witnessing at this time. But hopefully because of the regulatory action we have seen this evening there might be a little bit of pull back and relief over the next couple of days.

Keeping our fingers crossed and hoping this will do some better for the markets than the bailout package managed to do.

CNN-IBN: We hear from the Finance Ministry that there's no need to panic. Montek Singh Ahluwalia (Deputy Chairman, Planning Commission) says India is insulated, yet markets still drop hundreds of points everyday. What's going on? The worry levels are unprecedented but who is causing the crash - FIIs or ordinary investors?

Udayan Mukherjee: Well, both you can keep expecting panic from all classes of investors right now. I don't think domestic insurance companies or mutual funds are selling a whole lot but I think domestic trades, net worth investors have sold quite significantly over the last few days.

Of course the FII pullouts, global pullouts continue unabated, that’s the big problem which is leading to a bit of mismatch of supply and demand in the market. The fact that there is so much relentless pressure which is going on from global investors because of the de-leveraging.

As long as that continues and the global news flow continues to be bad it is going to be difficult for the markets. There could be pull backs because markets are getting over sold every three or four days because now they are falling at the rate of 3-4 per cent everyday.

But if you are asking this is the end of the pain, I doubt that very much. Maybe we get a temporary bounce back and some relief because some markets are over sold but eventually I wouldn't be surprised even if lower levels come.

This is a typically bear market which is front of our eyes and stocks do fall like nine pins in bear markets and it shouldn't surprise some one who has seen bear markets in the past. That's the course this market is taken. It's distressing but that's the reality.

CNN-IBN: You said the market is oversold. What would you tell the investor today? Are there any particular stocks they could look at that are undervalued and are good buys? Given the pessimism with some predicting the market could hit below 10k even would you recommend investors should just sell out, take their money out while they can?

Udayan Mukherjee: Well, it is probably a bit late today the low was 10k 700 for the Sensex and we bounced back to close just above 11k. Perhaps a good time to sell was a bit earlier but if you do get a few trading bounces a bit back higher I think it will be good to sit on cash at the moment.

I don't know whether distress selling after the kind of damage we have seen already is a good idea because people sell due to panic at virtually towards the lows of the market which is not a very clever thing to do but I suspect that even if you do get small modest pullback rallies it may not hurt to stay in for the moment.

And people have been trying to find value and stay invested for most part of this year. It has not worked so far. I think this bear market will make you hurt a bit longer than people expect. It might not be the right time to bail out but being in cash will be the prudent way of approaching things.

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