sarwesh

Having lost over one-third of its value in less than six months, stock market seems to have more pain in store for investors with experts seeing the benchmark Sensex heading back towards 12,000 level in the next few months.

The continuing crude oil rally and unabated selling by FIIs are unlikely to let the market see a near-future uptrend, while domestic factors like inflationary pressures and rising interest rates are also playing spoilsport, analysts believe.

International brokerage and equity research major CLSA analyst and renowned portfolio manager Christopher Wood has told his clients in the latest June edition of his famed ‘Greed and Fear’ report that the Senses dropping back to a 12,000 level could not be ruled out in the wake of surging oil prices and continuing selling activities by foreign investors.

"Certainly, a re-test of the 12,000 level on the Sensex cannot be ruled out in these circumstances. And that will be accompanied by a further weakening in the rupee," Wood said.

Striking a similar note, research and analytics firm Evalueserve's Chairman Alok Aggarwal wrote in a whitepaper that Sensex could drop to 12,000 level in the near term if the present financial crisis does not subside, crude oil continue to trade upward and FII outflow continue unabated.

"We now believe that the Sensex could drop to 12,000 in the near term, the Rupee could depreciate by another 5-6 per cent against the US dollar, and the GDP growth could slow down to approximately six per cent by the fourth quarter of this fiscal year," Aggarwal said.

Agreeing to the probability of Sensex falling to 12,000 level, domestic brokerage firm Asika Stock Brokers' Research Head Paras Bodhra said corporate earnings could also be a major driving factor in the coming months.