Sensex plunges 704 points: Analysts take on how to trade in markets tomorrow

MUMBAI: Sensex slumped 4.1 per cent on Thursday in its biggest one-day slide in more than two years as investors fled risky assets across global markets on a grim US economic outlook and slowing manufacturing growth in China.

The 30-share BSE index fell 4.13 per cent, or 704 points, to 16,361.15, its lowest close in nearly one month. It was the biggest one-day per centage fall since July 6, 2009 with all of its components dropping.

World stocks as measured by MSCI fell more than 2.4 per cent to a new year low, making for a 14 per cent year-to-date loss. The more volatile emerging markets stock index was down nearly 5 per cent for a 22 per cent 2011 loss.

Analysts call:

Mitesh Thacker, Technical Analyst

"On short positions which have been running, we have booked about two thirds of the position, held onto one third with the position. If we get a massive gap tomorrow, it will be some tough luck but you have got to take your profits when you are making good money. You have fallen 200 points off the yesterday's closing and you are close to an important level of 4910.

That is the way I would trade. In case somebody wants to initiate short fresh positions, I spoke about IB Real Estate. Larsen for the first time is breaking below 1500 range number of months.

So these are stocks where I would initiate but again in line with the fact that the way market has behaved, I would advise shorting only about 33% or about 50% of your actual trading quantity and then hold back and see how the market reacts.

I do not think there is any point in taking any kind of long positions while you have fallen a lot. A new fall or probably a new leg of fall as I can put it has started today. Now in a bear market or a downtrend you might have good days or you might have up days but I do not think you make money by going long on those days.

The good strategy would be to wait for pull back if somebody has not short, shorting at higher levels we have discussed about levels. Breaking below previous lows would indicate lot of selling pressure, you have seen the environment the news flow which is happening around us, global markets, European markets are having problems.

So given the kind of news flow if you are breaking below the recent lows which have held out nicely that clearly is an indication that this market is not going up but it is going down and therefore you have to be short and not long.