As the date for election result fast approaches, analysts are expecting equity markets to trade in a tight range with high volatility. Urging investors to stay cautious, some experts are recommending profit booking on every rise while there are a few analysts, who expect markets to surge immediately after poll results are out.
Fortune Fiscal’s Jagdish Thakkar pointed out that until the election results are out, markets would trade around current levels. He said, “We are expecting markets to stay in a tight range with limited down side. Even though the markets are in a bull phase, investors should not expect any significant jumps in the coming days.”
As a strategy for investors and short term traders, Thakkar added, “Traders should stay stock specific and avoid taking big risks. Markets might report small rallies which investors and traders should utilise to book profits.” He further added, if a stable Government comes to power, markets would skyrocket and investors should book profits rather investing more money.
Rakesh Bansal from RK Global Securities warned investors from rushing into markets and getting trapped on higher levels. He also urged traders to follow the market trend and avoid trading against the market direction. “long term investors should stay away from stock markets and wait for the volatility to come down before again investing funds,” Bansal added.
When asked what strategy should investors adopt in the current markets, Bansal replied, “The best strategy would be to stay stock specific and once markets corrects, invest in companies posting good quarterly results. Traders on the other hand, should be quick and sell before getting trapped on the higher levels in the market.”
Despite holding a positive view for the longer term, Kunal Saraogi from Equity Rush is expecting heavy selling on the shorter term. “Markets are quite over priced right now and we expect the correction to continue. As volatility is expected to stay high, investors should avoid buying on current levels and wait for markets to show signs of consolidation,” Kunal added.
While investors should stay away from markets, there would be multiple opportunities of short term traders. “Investors should sell every time markets rises and buy only when stocks have corrected substantially. Due to high volatility, many opportunities will be there for short term traders. Traders should not wait for big gains and book profits immediately,” Kunal said while formulating a strategy for the investors.
Unlike most of the analysts, AK Prabhakar, a senior market analyst holds a slightly contrarian view. “If the correction in markets is short lived, a strong bounce back is possible. Also, if the outcomes of the elections are as anticipated by the markets, a sharp rise is certain and would yield good returns.”
Even Prabhakar is expecting markets to stay choppy but urges investors not to be completely absent from the markets and look for opportunities. While advising investors, Prabhakar said, “Investors should give up their aggressive stand and adopt a defensive approach and should focus more on pharmaceutical and IT shares. Also they should completely avoid capital goods sector as it is expected to stay under pressure.”