This time new year came with more pain than joy for the Indian stock markets. In the only three session since the start of 2014, Sensex has fallen by nearly 320 points and going forward, analysts expect the correction to continue. As the general election date fast approaches, analysts further add that the coming few weeks are going to extremely volatile and advise investors to trade cautiously.
Talking to The Pioneer, Ravi Rastogi from Globe Capital said, “We are expecting the month of January to be full of news and thus would be extremely choppy. Also, with US tapering coming into effect, my advice to investors to be defensive and avoid taking big risks. As far as economy is concerned, we are expecting sign of recovery but inflation would remain the key trigger. If inflation does not ease, another round of interest rate hike is certain.”
Ravi also thinks that the rally has reached its peak and now will correct and advise investors not to rush into buying at current levels. “We are expecting markets to correct now and advise investors to avoid buying right now. Investing on higher levels would only result in losses as most of the stocks are currently overpriced. It is best to wait for the correction to get over and only after that, investors should look for buying opportunities.”
Even Equity Rush’s Kunal Saraogi feels that the markets would continue to fall and retail investors should wait till it stabalises. He said, “After the recent rally, we are expecting the markets to correct further. Investors should trade carefully and in stocks which are fundamentally strong. The most appropriate strategy for investors in the current markets is to buy on decline. Investors should focus more on bank, non banking financial companies and pharmaceutical stocks as they would be the first to recover after the correction ends. Also, avoid trading in metal, infrastructure and real estate shares for some time as we expect them to remain weak.”
Ashok Agarwal from Escorts Securities also urged investors to stay calm and wait before re-entering the markets. He said, “Investors should approach markets in an extremely cautious manner as the correction is going to continue on the short term. In the coming days, markets might show signs of bounce back would remain volatile due to the political unrest as the general elections are just around the corner. Retail investors, in my view, should wait for the market correction to get over and also for the volatility to ease down. Once the markets start to consolidate, investors can buy again with long term view.”
On one hand, most analysts are advising investors to stay defensive and avoid losses, Jagdish Thakar from Fortune Fiscal is bullish and feels that the correction is almost over and now markets would bounce back. Despite being extremely positive on markets, Thakar expects the market volatility to remain. He said, “The current correction in markets is short lived and soon stocks would again start to bounce back. Also we are expecting companies to post good quarterly results and the upcoming index of industrial production data would also show signs of economic recovery. Helped with these positive triggers, we are expecting the markets to bounce back again. Investors should focus more on pharmaceutical, technology and information technology stocks and avoid trading in automobile and capital good shares.”