Indian stock markets have been trading in a narrow range since the last couple of weeks but now on the short term, experts feel Indian stock markets might surge a little. Due to the high rate of volatility, experts advise investors to use this short term rise in markets to book profits. With the February derivative expiry in this week, short term traders should avoid taking big risks and follow the direction of the indices, experts added.
Advising investors to trade smartly in a range bound volatile market, Jagdish Thakkar of Fortune Fiscal said, “Investors have to be extremely careful for the next three months until the General Election results are not final. It is best to keep existing positions in the stock markets hedged to avoid heavy losses due to sudden movements of the indices. We expect on the short term, markets would carry the momentum and rise but with market volatility so high, traders should not wait for large gains. It is best to sell on every rise to avoid major losses.”
With the derivative expiry on February 27, Thakkar warns traders not to rush in to pick up positions and wait for condition to calm down. “This month’s expiry would be extremely choppy and traders should not impatiently start buying as the markets can fall sharply. While most of the sectors would see selling pressure, traders can focus on information technology, capital goods and automobile stocks as they are expected to perform. Also, traders can buy specific pharmaceutical stocks especially from the midcap segment but should not buy those shares which already have touched their highs.”
Ravi Rastogi of Globe Capital also feels that on the shorter term markets might again surge but feels that this rise would be short lived. He said, “On the short term markets might rise a little but we do not expect them to sustain on higher levels and short term traders should use every rise to book profits. Since elections are close, long term investors should wait before buying in the current markets as we expect a sharp correction to start soon. It is best for investors to be stock specific and look for opportunities in the midcap segment as it is yet to perform.”
While majority of analysts feel the rally would be short lived, Equity Rush’s Kunal Saraogi is extremely bullish of the Indian stock markets. “I expect this rally to continue and with foreign institutional investors again buying, we expect to test higher levels soon. In the current scenario, I would advise investors and traders to focus more on select midcap stocks as they would outperform the frontline indices. Power stocks have been through a long correction and now are showing signs of reversal. long term investors should wait for the market volatility to drop and then invest in power, information technology, pharmaceutical and private banking stocks. On the other hand, traders should avoid real estate and fertiliser companies as they might fall sharply.”
Support Kunal’s view, Rakesh Bansal of RK Global also expects the current surge in stock markets would continue. He said, “The market rally is expected to continue backed by fresh buying from both foreign as well as domestic institutions. We are expecting the markets to test its highest levels in the medium term.”
While crafting a strategy for retail investors, Bansal added, “Volatility of the markets would remain high and investors should trade with a very cautious approach. If the markets start correcting, investors should not waste time and book profits before the indices register a sharp fall. Also traders should follow market direction and avoid taking any risks. Investors should stay stock specific and invest only fundamentally strong stocks with sound balance sheets and order books.”