Diminishing hopes of a possible rate cut putting more pressure on the already weak equity indices, analysts are expecting the markets to fall further. With the Reserve Bank of India’s (RBI) policy review on January 28 and expiry of the January derivative series on January 30, analysts warn the retail investors to trade with extreme caution as markets could turn out to be quite volatile.
Talking to The Pioneer, Fortune Fiscal’s Jagdish Thakkar said, “we are expecting the markets to fall further from its current levels and things would go from bad to worse for the Indian equities if the US markets also continue to see selling. This time selling might not be sector specific and can happen across the board and so investors should completely avoid buying the current scenario. Rather investors should focus more on booking profits. Short term traders should also wait until the markets start showing signs of consolidation on the lower levels before buying.”
Expecting RBI to wait for January inflation data and not make any changes to its policy, Ashok Agarwal from Escorts Security said, “In my opinion, RBI would keep all the rates unchanged and would wait for another round of inflation data before taking a final call on reducing rates. Maintaining a status quo would further add pressure to the markets pushing them further down.”
Agarwal feels investors should be more stock specific and hold a longer time frame in the prevailing situations. “Investors should stay out of markets and wait for the correction to get over. Only when there are clear signs of reversal in the equities, investor should buy with a long term view. As far as short term traders are concerned, they should trade along the direction of the markets and avoid taking big risks.”
RK Global Security’s Rakesh Bansal is also holding a negative view on the short term markets and feels the global markets would further add pressure on the Indian indices. He said, “Ongoing correction in the US markets might have an adverse impact on the Indian markets causing them to fall further. We advise investors to book profits on every small rise because if the markets falls further, we are expecting panic selling to take place.”
Despite a completely negative outlook on the stock markets for the short term, Bansal also added, “Once the correction is over, there would be multiple opportunities for investors to purchase fundamentally sound shares at considerably cheaper prices. Hence, investors should wait and watch right now and rush in to buy falling stocks. Also on the medium term, we are expecting markets might even try and breach its all- time high levels but it would not be able to sustain there for long.”
Unlike other analysts, Kunal Saraogi from Equity Rush feels that even though markets might fall further, there are plenty of opportunities of retail investors to buy. “long term investors should stay in frontline shares and use every correction to buy a little. Investors should not pour in all their funds in one go and in just one stock, rather they should keep a balanced portfolio and invest in a staggered manner.”
While pointing out the strategy for investors on the short term, he added, “Because of the RBI policy review, we advise investors to avoid rate sensitive stocks. They should first allow the correction to completely get over and then buy shares with clear growth plans and stable balance sheets. Short term traders should approach markets very carefully and try and trade with the flow of the equities. They should completely avoid taking heavy risks and opt of quick profit booking as soon as they get a chance.”