With just days away from the General Elections, market experts expect the ongoing rally in the stock markets to be short lived. Calling it a traders’ market, experts pointed out that with the purchasing managers index (PMI) to be released during the week, short term traders can utilise the volatility in the index and can purchase momentum stocks. Though, all experts advised that the traders should follow a strict stoploss on their position to avoid heavy losses.
In the last five sessions, Sensex has surged by over 580 points backed with fresh buying from foreign institutional investors and domestic retail investors. But going ahead, Ashok Agarwal from Escorts Securities is expecting this rally to exhaust due to profit booking. He said, “In the next a few days we are expecting indices to correct sharply with real estate stocks trading under maximum selling pressure.”
Market volatility expected to stay high, Agarwal advises long term investors to hold their positions and avoid fresh buying. “Investors should wait for the indices to consolidate after a sharp correction before again buying. While short term traders should focus more on momentum stocks and trade with a strict stoploss.”
Ravi Rastogi, a Senior Market Analyst, stressed that long term investors to stay away from markets until the election phase is completely over and things become clear. While commenting on the short term future of markets, he stressed that the present rally won’t be able to sustain on higher levels and soon markets would plummet.
“We are expecting the equity markets to stay volatile but after the elections are over, especially in the months of May and June, markets would again start a strong rally,” Rastogi added.
As his recommendations to investors, Rastogi said, “long term investors should wait for the volatility to come down and market direction to become clear before investing again. As far as short term traders, there are plenty of opportunities in the volatile markets but they should stay stock specific and avoid taking big risks.”
Globe Capital’s Rakesh Bansal is expecting the rally to continue with indices again trying to touch higher levels in the near future. With the market sentiment improving, he stressed that traders can use this short term rally and purchase stocks with strong momentum. “Investors should stay stock specific and focus more on fundamentally strong shares with sound balance sheet. Traders should follow the direction of the equity markets and trade with strict stoplosses. Traders should avoid holding stocks for larger gains and use every rise as an opportunity to book profits,” Bansal added as his advice.
Unlike other cautious experts, Kunal Saraogi of Equity Rush continues to be bullish on the Indian markets and stressed that prior to the elections, markets would try and touch its higher levels once. “Market sentiment is extremely positive with all eyes now fixed on upcoming economic data. If they show signs of recovery, market rally would extend with indices again trying to reach their record highs,” Saraogi said.
As an advice to investors, he added, “It is a short term traders market and long term investors should stay away from buying anything right now. Traders should focus on beaten down sectors and focus more on momentum stocks which have already fallen.”