With Indian stock markets being completely dependent on foreign institutional investors (FII), markets experts advise long term investors not to rush into buying on higher levels. Sharp bounce back of Sensex after falling by nearly 440 points, analysts are expecting volatility to remain high in the coming days.
While talking to The Pioneer Jagdish Thakkar of Fortune Fiscal stressed that the bounce back would be momentarily and urge investors to trade carefully. Despite the overall trend of markets looks positive on the short term, Thakkar said, “Markets are expected to start the week on a positive note backed by robust quarterly results. But it is best for long term investors to wait before buying as we expect markets to again start falling soon.”
Calling it’s a trader’s market, Thakkar adds that short term traders should follow the direction of markets. As his strategy for traders, Thakkar said that short term traders should book profits on every rise and avoid holding positions for larger gains. For long term traders, he added, “Once markets start consolidating after the correction, they should buy best stocks in bank, capital goods and automobile sectors.” He also urged investors to avoid infrastructure, cement and metal sectors as they might continue to fall.
As this month’s derivative expiry is due on April 23, Ashok Agarwal from Escorts Securities is expecting stock indices to be extremely choppy. He further adds that last week’s surge was unexpected and would not sustain. “Friday’s rise was quite unexpected and hence there is a large possibility of markets correcting again during this week.”
When asked what should investors do going forwards, Agarwal replied, “Investors should avoid buying on current levels and wait for the markets to correct properly. Short term traders on the other hand, should utilise every bounce in markets but should trade with strict stoplosses.”
Equity Rush’s Kunal Saraogi also stressed that long term investors should stay away from current markets and wait for the markets to consolidate before investing. “Right now, market direction is controlled by FII flow and if investors purchase on current levels, they might get trapped,” Saraogi said.
He further stressed that the clear picture of markets would only emerge after the results of the ongoing General Elections are out and advised investors to wait. As his investor strategy, Saraogi added, “Short term traders should buy companies which are expected to post good results and should book profits on the very first opportunity they get.”
Unlike most of the analysts, AK Prabhakar, a Senior Market Expert holds a slightly different view. Convinced that the bounce back would sustain, Prabhakar said, “Market is expected to stay positive as most of the companies post good quarterly results. I do not expect any major correction in the markets till the elections are over.”
He further added that long term investors should use every small decline as an opportunity to buy but stressed that investors should purchase stocks in a staggered way. “Investors can buy front line information technology (IT) stocks and hold them for the next 1- 2 months. IT sector has not participated in the ongoing rally and if FIIs continue to pour in funds into the Indian markets, I expect IT sector to give good returns.”