FALL IN SENSEX ONLY TECHNICAL CORRECTION : PHD CHAMBER

The sharp fall in the Sensex is apparantly a technical correction which was overdue and has brought the market to a more realistic level. Market was overheated due to strong liquidity in the system on account of increasing FII inflows, according to Mr. Sanjay Bhatia, President, PHD Chamber.

Mr. Bhatia said that further, Indian capital market has over the years integrated with the global markets. The decline in the global markets and the prediction of higher inflation rates on the domestic front have affected the investors' sentiments which has led to the selling pressure and slide in the indices. Possibly, the higher interest rates have begun to have a negative impact on the corporate earnings which may have affected the investors' perceptions. This is also corroborated by the NCAER Business Confidence index that has shown a decline of 13.4 points during the first quarter of the current fiscal, reflecting subdued sentiments in the business sector.

However, the current fall in the market indices should not be a cause for concern and the investors should continue to make informed decisions about investments. The industry is confident and optimistic about the strong fundamentals and growth in the economy, added Mr. Bhatia.