With both measurements of inflation, consumer price index (CPI) and wholesale price index (WPI), showing signs of easing and domestic markets gaining momentum towards the end of the last week, experts feel the equity indices might continue to rise further. Even though warning investors that the market volatility would remain high, experts are expecting a small pull back in the markets. But they also feel that investors should utilise this rally for profit booking and avoid fresh buying for a while.
Ashok Agarwal from Escorts Securities stressed that despite a decline in the data of index of industrial production (IIP), markets sentiment might remain slightly positive due to easing in CPI and WPI numbers. He said, “Markets would continue to stay volatile but we expect a small pull back in the short term supported by positive CPI and WPI data. While we advise long term investors to avoid buying in the current market, short term traders should follow the market trend and avoid taking big risks.”
Urging traders to book profits on every rise, Agarwal added, “Traders should be extremely cautious and should not wait for large gains and exit their positions on the first opportunity they get. As far as long term investors are concerned, they should wait for markets to fall considerably before buying again. We expect equities to correct sharply and once the markets show signs of consolidating at lower levels, investors should look for opportunities to buy. We expect information technology and pharmaceutical stocks to continue to perform. Banking shares might also show a bounce back as they already are trading at their lower levels after heavy correction.”
As we approach Vote on Account, Jagdish Thakkar from Fortune Fiscal thinks that Finance Minister’s (FM) decision would have the most impact on the markets in the coming days. He said, “With positive data and US markets rising, we expect Indian equity markets to also show a rally on the short term. But going ahead, all eyes would be on the vote on account presented by Finance Minister. We are expecting FM might give some breather to market, especially to automobile industry.”
As his advice for investors, Thakkar added, “Investors should focus more on gems & jewellery, automobile, banking and capital goods sectors as they might show strong bounce back. While on the other hand, investors should also avoid infrastructure and real estate, cement and metal stocks as they might continue to see selling pressure. Short term traders should book profits on every rise and long term investors should only buy after markets reports a deep correction.”
Equity Rush’s Kunal Saraogi stressed that short term traders should not trade against the direction of the market. “Markets might bounce back on the short term but this rally will not be able to sustain on higher levels. Investors should book profits on every rise and completely avoid fresh buying at current levels. Short term traders should act according to the direction of the market and avoid holding profits for larger gains. We expect the markets to fall sharply after this small rally and long term investors should wait for this correction to initiate fresh buying.”
Pointing out that the markets are trading at critical levels, Rakesh Bansal from RK Global said, “After the bounce back on Friday, we are expecting the markets to rise more in the coming days. Hence, we advise investors should avoid taking selling positions in the current market. Markets are at a very critical stage and if equities start to fall again, we expect the fall to be quite big. long term investors should hold their existing stocks and buy fresh after the markets corrects sharply. Sectors which investors should keep a focus on includes technology and banking.”