last week saw one-way traffic as Sensex surged by over 973 points recording its new life time high. Sustained heavy buying for foreign institutional investors in beaten down sectors was the primary reason behind the rally. Despite expecting the buying momentum to carry on in the coming days, experts advise investors to be extremely cautious while investing in the market on current levels.
While talking to The Pioneer, Escorts Security’s Ashok Agarwal warned investors of heavy profit booking as the rally is not broad based and recommended small investments for the short term. He said, “We expect the markets to rise further but investors should be careful as markets might correct sharply from the higher levels.”
He further added that short term traders should also initiate buy positions and avoid selling as retail buying can push the indices further up.
As his strategy for the investors, Agarwal said, “Traders should follow the momentum while long term investors should buy after the markets correct a little. Investors should focus more on beaten down sectors including infrastructure, real estate and state- run banks.”
AK Prabhakar, a Senior Market Analyst, also added that the rally would continue with small corrections seen in between. Being quite optimistic of the rally, Prabhakar added, “I am expecting Sensex to trade in a range of 21,600 till 22,650 and on the longer term I am expecting new highs to be made.”
As his advice to investors, Prabhakar stressed that long term investors should not rush to book profits and hold their positions and should buy in every decline. “I am expecting capital goods, banks and automobile stocks to be the leaders of this rally while traders should avoid FMCG and export oriented stocks,” Prabhakar added.
Rakesh Bansal from RK Global is also very bullish on the markets but did warn short term traders of a possible correction soon. “The rally might continue on the short term but profit booking from higher levels might add pressure so short term traders should follow the direction of markets and avoid holding positions for larger gains,” Bansal said.
As far as long term investors are concerned, Bansal urged them to be stock specific and continue to invest in a staggered way in the markets. While giving his strategy for investors, Bansal said, “Investors should buy on dips and in beaten down stocks with sound fundamentals. They should avoid shares which already have shown a rally.”
like others, Kunal Saraogi from Equity Rush also is expecting the rally to continue. But as a warning to all the investors planning to pour in heavy funds to encash this rally, he advised them to avoid buying on the current levels. “Investors planning to enter now should avoid buying as the markets have already surged by over 5 per cent. Rather they should wait for profit booking to start and markets to correct,” he added.
As his strategy, he said, “long term investors should buy on dips and avoid information technology, pharmaceutical and technology stocks as they already have shown a significant run- up. Rather they should focus more on public sector banks, infrastructure and other beaten down shares.”