Despite choppy trading sessions, last week equity markets remained range bound with foreign institutional investors (FII) buying heavily on the one end while domestic investors booking profit on the other. Going ahead, analysts also are split in broadly two view points as some expect a sharp correction to start soon while the rest feel the overall momentum coupled with FII buying to push markets higher.
Market volatility is the only aspect on which both segments hold the same view. With April monetary policy fast approaching and march expiry due in this week, all analysts feel that the market volatility would quite high and advise investors stay trade carefully.
In a discussion with The Pioneer, Fortune Fiscal’s Jagdish Thakkar warned investors to be extremely cautious as he expects a sharp correction to now start on the short term. He said, “Markets might consolidate around the current levels for a while but once FIIs start to book profits, we are expecting a sharp fall.”
As his advice to investors, Thakkar recommends short term traders to avoid taking big risks as they might get trapped due to choppy market conditions. “Traders should use every rise to book profits while the long term investors should wait for the correction to get over before buying.” With the month’s derivative expiry on March 27, he stresses that the volatility of the markets would be very high.
As Reserve Bank of India’s monetary policy review fast approaching, Ashok Agarwal from Escorts Securities also feels that on the short term, equities will be quite volatile. “With the expiry due this week, profit booking will pick up momentum and might push indices further down. Traders should exit from their positions on the first opportunity and wait for things to calm down,” Agarwal added.
Despite a negative outlook on the short term markets, Agarwal is quite confident that on the longer term markets would yield good returns. As his strategy for investors, he said, “long term investors should avoid investing at current levels and wait for the correction to get over. Also, investors should focus more on stocks which have already corrected a lot and invest in a staggered manner and hold for atleast two years.”
While one half of the analyst community is quite certain that stock markets would soon plummet from their higher levels, Rakesh Bansal of RK Global expects indices to rise further more. “Markets have consolidated and now would again show a small rise from current levels. Traders should follow the direction of the markets and trade accordingly,” said Bansal.
While urging short term traders to stay stock specific and focus more on high momentum stocks, Bansal added, “Investors should use every dip in the markets as an opportunity to buy. long term investors should invest in fundamentally strong shares with sound balance sheets.”
Equity Rush’s Kunal Saraogi, too, is quite bullish on the markets and stress that despite a volatile expiry, overall trend of the markets remain positive. “Indeed the volatility would remain quite high during the week but it would also provide plenty of opportunities for traders. We expect the markets to edge further up before the elections start,” Saraogi said.
When asked which sectors investors to keep eye on, he added, “With RBI monetary policy approaching and inflation coming down, we expect a rate cut is on the cards and hence investors should focus more on rate sensitive sectors. long term investors should buy on every fall and hold their stocks for atleast a year.”