The week ahead is lined with the announcement of key economic data including December Index of Industrial production (IIP) and January inflation numbers of Consumer Price Index (CPI) and Wholesale Price Index (WPI). Despite so many triggers, analysts still feel markets would continue to trade in a range with possibilities of a short term rise.
While estimating CPI and WPI inflation to ease going ahead, Jagdish Thakkar of Fortune Fiscal said, “Markets might recover in the coming days primarily due to short covering. Investors should use this bounce in markets to book profits as the overall situation still looks negative. While we expect the downside to be limited but the ongoing profit booking by foreign institutional investors would also restrict the rally on the up side.”
Advising investors to trade carefully, Jagdish stressed that indices would continue to trade in a short range unless there is not a drastic improvement in the domestic economic scenario. He added, “Investors should try and avoid information technology and pharmaceutical sectors as we are expecting them to fall due to heavy profit booking. Also investors should avoid buying at current levels and wait for domestic institutional investors to start purchasing equities.”
Equity Rush’s Kunal Saraogi also expects markets to trade in a tight range and advices traders to follow the market trends and avoid taking huge risks. But he also feels that on the medium term, things would improve for the markets. He said, “I continue to be positive on markets for a medium term outlook and would advice investors to use every fall to buy equities. Investors should focus more in fundamentally sound shares and avoid buying large quantities.”
While pointing out sectors where investors should focus more, Kunal added, “Investors can look for opportunities in financial and metal shares. Backed by value buying on lower levels, we expect these two sectors to outperform their peers and the indices. On the other side, investors should stay away from telecom and cement stocks as we are expecting these sectors to remain under pressure due to fresh selling.”
Ravi Rastogi from Globe Capital has a negative view on the short term markets and advices investors to stay extremely cautious. He said, “Even though markets might rise, profit booking from higher levels would limit the rally. Investors should also use this rally and book profits. The entire situation of the markets would improve only after election results are out, until then markets would continue to remain volatile and range bound.
Unlike other analysts, AK Prabhakar, a Senior Market Analyst, is very bullish on markets and expects the correction to stop now and markets to show signs of reversal. While listing sectors investors should now invest in, he said, “I expect metal companies to post health growth in their results which would be directly reflected in their shares prices as well.”