It has been one-way traffic for the Indian equity markets for almost throughout the month of March as foreign institutional funds (FII) have poured in $3 billion over the month. But analysts feel the current market is no more than a trap for the retail investors and warn them from rushing to invest their hard earned money in the current market.

In just March alone, Sensex has surged by 5.7 per cent till now and with FIIs continuously pumping in more and more money, experts are expecting the markets to rise a little more. While talking to The Pioneer, Ashok Agarwal from Escorts Securities stressed that retail investors should avoid markets for some time. He said, “Till now the rally has been primarily due to FIIs investing almost Rs 20,000 crore in the stock markets. But if the same FIIs sell even Rs 5,000 crore worth shares, Indian stock markets would crash.”

He urged retail investors to avoid markets and wait for a correction before rethinking of investing. “Investors should completely avoid buying on current levels as they can fall in a trap. The more retail participation would increase, more profit booking would come from institutions which would cause markets to plummet,” Agarwal added.

With the Reserve Bank of India’s (RBI) monetary policy review scheduled on April 1, Agarwal is hopeful that the central bank would make no changes. Despite inflation showing signs of easing, Agarwal is certain that the RBI would maintain a status quo and wait some more before it officially starts to reduce interest rates.

Despite expecting markets to rise further more, Jagdish Thakkar from Fortune Fiscal advised investors to prepare for a sharp correction. With rupee again rising above Rs 60 per dollar mark, Thakkar is sure that soon FIIs would start booking profits. He said, “Markets are sure to fall since it is the best time for FIIs to sell their positions. Also Indian equity markets have become more expensive in terms of valuations than the US markets and hence FIIs would take their money out from Indian markets back to US.”

As his advice to investors, Thakkar added, “Investors should completely avoid markets and wait for the correction to happen. Those investors who haven’t bought anything should not rush in now as they can be trapped on the higher levels.” As far as RBI’s policy stance is concerned, Thakkar also feels that the central bank would not make any changes and wait for more economic data.

Equity Rush’s Kunal Saraogi is also bullish on the markets but advises investors to stay away from markets. On RBI front, he also feels that the central bank would announce a status quo and make no changes at all. He said, “This is a traders market and small term traders can get good returns in the next few days. long term investors should avoid buying on the current levels as we expect the markets to correct.”

As a strategy for investors, Saraogi added, “Short term traders should buy banking stocks and exit their positions as soon as they get a little profit. They should not hold stocks for larger gains as they might get trapped on higher levels if the market starts to correct. long term investors should buy in a staggered way on every decline.”

Unlike most of the analysts, AK Prabhakar, a senior market expert expects this rally to continue for the next few months. He advises traders to buy every time markets correct and book profits on higher levels. “Traders should buy on dips as we expect to see 7,500 levels on Nifty and 24,850 levels on Sensex in the next 3- 4 months,” Prabhakar added.

As per Prabhakar, those long term investors which haven’t participated in the current rally should now avoid markets completely. As a warning to retail investors, Prabhakar added, “They should wait for a correction now and avoid buying on higher levels as they can be trapped there for a very long time. Traders should focus more on banking, metal and capital goods stocks as they are expected to outperform and avoid defensive sectors.”

When asked what he expects from the RBI, he said, “RBI had hiked rates in its January policy review but now in the coming review we expect them to hold everything.” As far as market is concerned, he added that the stock markets have already factored in a status quo from RBI and hence do not think it have any major impact.