Market rally to continue, traders to book profits on rise: Experts
Euphoria of the Bharatiya Janta Party winning with clear majority in the 2014 General Elections was evident from the 1,000 point rally in the Sensex. But despite losing almost 700 points in heavy profit booking, analysts expect the bull rally to continue on the medium term. With all eye now set on economic policies and reforms by the new Government, analysts are certain that the markets would continue to surge with small corrections in between.
Certain that equity markets would start the week with a gap up opening, Rakesh Bansal from RK Global Securities advises traders to look for opportunities in the midcap segment also. "We expect the market rally to continue with midcap stocks outperforming the front line indices. Traders also need to be cautious of small corrections and should use these dips to buy high momentum stocks with a view of maximum six months."
He further added that if the new Government announces strong economic reforms and policies to boost the growth, equity markets might skyrocket again. As his advice for traders, Bansal added, "Traders should keep a short to medium view in the markets utilise every fall in equities to buy. Traders should focus more on infrastructure and real estate stocks from the midcap category as they can yield good returns if the Government starts giving quick clearances to pending projects."
Kunal Saraogi from Equity Rush is also certain that the bull rally would continue and traders should make the most out of it. Calling it a "trader's market", Saraogi said, "This is the best time for short term trading and long term investment should be avoided on current levels. Markets are expected to rally to new highs but small corrections are also possible. Traders should wait for the corrections to end and buy again."
Suggesting traders not to wait for larger gains, Saraogi advises them to book profits at regular interval while investing every time market falls. "It is not possible for stocks to surge continuously and hence traders should not be afraid of small correction. Rather, traders should again buy stocks awaiting clearances from the Government on every fall."
like the rest, Ak Prabhakar, a senior market expert holds a quite positive outlook for the stock markets over a medium term. Expecting major economic reforms coming from the new Government, Prabhakar said, "Markets will continue to surge to new highs with minor corrections in between. Now that BJP has complete majority, it would be much easier for them to clear major economic reforms in the parliament and this would overall improve country's rating and investment scenario."
As his strategy for the traders, Prabhakar adds, "Traders should use every correction to buy stocks and book profits once the stocks start to slowdown in momentum. As far as investors are concerned, they should wait for the markets to correct properly before buying. Once the correction is over and markets start to consolidate, investor should look for opportunities in automobile sector as it is expected to be the next biggest performer in the markets."
While most of the analysts are confident that market rally would continue, Jagdish Thakkar from Fortune Fiscal is skeptical on market's future for the short term. Thakkar said, "Markets are in overbought phase and are quite expensive. Hence, we expect the profit booking to happen for some time which can push Sensex down by 600- 700 points. But on the longer term, having a stable Government would help the markets to improve overall."
As his advice for the investors, Thakker added, "Investors should wait for the correction to end completely before again buying for the longer term. Buying on current levels is not advisable for long term investors as they can get trapped on higher levels. For short term traders, it is best to book profits and wait for markets to correct a little before again buying."