Panic selling could occur if Nifty breaches 5,900

By Nimesh Shah, CNBC-TV18

There is nervousness in the market. The initial FII flows suggest negative inflows across all sectors. The buy side ratio could be close to 1:3, clearly tilted in favour of sell, but that is not the worrying point. The larger worry is the fact that there is supply coming in from domestic mutual funds. The buzz on the street is that some of the larger domestic funds are facing redemption pressure from retail clients. That is the reason why there is a bit of supply coming in from that pocket. As far as the retail participation in today's trade is concerned, most brokers have conformed that they are not allowing fresh buying from the retail side purely because they see some nervousness further ahead. They also don’t want any margin issues. So, they are not encouraging good amount of buying at these levels.

One needs to crucially look out for 5,900 on the Nifty because that is one point where one could see a bit of margin pressure coming in from the retail side. If that comes, one could probably see further panic sell off in the market, at least from the Nifty point of view. There is a bit of buying coming in 2-3% lower than current levels in few largecap stocks. One could see a bit of buying coming in at lower levels but as things stand, there is a bit of selling pressure both from the domestic and FII institutions. There is not much buying coming from retail as well. One will have to wait and watch for crucial Nifty support levels.