last week has been a rollercoaster ride for investors as markets swung between heavy selling from domestic institutions and enormous buying from foreign investors.
But amid these two groups, analysts express concern for the small and medium retail investors. Expecting markets to be extremely volatile in the coming months before the general elections, analyst advise investors to avoid buying stocks, especially the ones already trading at their all-time high levels and invest carefully with a longer time view.
Talking to The Pioneer, Globe Capital’s Ravi Rastogi urged investors to trade smartly and avoid getting into traps by buying stocks on higher levels. Expecting the coming couple of days to be critical, he said, “Medium and small investors should avoid the markets completely since there are greater risks of losing money as the current rally of indices is hollow. Indian stock markets are fundamentally weak on the shorter term but if an investor has a time-frame beyond 2014, investing in markets after the correction is over would give good returns. There is a general view that the year 2014 will be good for markets, but I think it would be a very tough year for retail investors.”
He expects the markets to remain volatile till the general elections are over but stressed once a new Government takes control, certain sectors might start picking up. “I think power stocks will the next big movers in the equity markets along with telecom and infrastructure shares. As far as information technology sector goes, it has already seen its peak and I do not expect it to rise significantly in the coming months. Automobile sector is showing some signs of recovery but their revival will take some more time,” he added.
Jagdish Thakar of Fortune Fiscal also said that the current rally would be short lived and would not be able to sustain on the higher levels. As an advice to investors, he said, “We advise investors should avoid markets for some time as the markets currently are managed by the big players. Investors should not jump in to sharing trading at their highs as we expect these shares to start correcting soon. Investors should trade carefully and buy only after the markets fall and stablaise. Also while investing for a longer term, keep in mind the upcoming elections.”
Expecting midcap and small cap shares to perform better than the frontline stocks, Nitin Murarka from SMC Global thinks on the shorter term markets might make new highs. “I advise short term traders to buy midcap shares and avoid the bluechip counters. While long term investors should buy every time market falls. But long term investors should keep a balanced portfolio and not keep their entire exposure in just one sector or stock. Markets would continue to be volatile and, hence traders should tread with caution as the coming days would be extremely difficult for them.”
Escort Security’s Ashok Agarwal also expressed concerns for the small investors in the institution driven markets and said, “liquidity would decide the market direction in the short term but on the longer term things look much better. The current volatility of the markets would continue till the elections are and hence investors should plan their trades keeping everything in mind. As far as inflation is concerned, I do not expect any drastic fall to come in the coming month. We advise investors to completely avoid markets in the remaining days of December and wait for stocks to come down and then you’re your investments according in the next month.”