Jun 18, 2012 10:57 PM IST | Source:

Market outlook: Where is Nifty headed now?

At closing bell, the frontline indices closed with cuts of around 1.5% each. But experts haven‘t given up on the market yet. They are optimistic in the near-term. According to them, the uptrend is still intact.

Moneycontrol Bureau

The pro-bailout parties eked out a slim majority in Greece's election. The outcome sparked off a rally in the morning. However, the monetary policy shocker knocked the wind out of the Indian market. The frontline indices fell off a cliff, with banking stocks leading the fall. The renewed fears about Spain only added to the woes.

The Reserve Bank of India defied widespread expectations and left interest rates and the cash reserve ratio unchanged.

At closing bell, the frontline indices closed with cuts of around 1.5% each. The Sensex ended the day at 16,705.83. The Nifty shed 74.80 points to close at 5,064.25.

But experts haven’t given up on the market yet. They are optimistic in the near-term. According to them, the uptrend is still intact.

Sudarshan Sukhani of says, the trend has not changed. “We had a breakout from 5,000. We have come back to 5,000. That’s okay. Market will be volatile and we have to live with that volatility. But to my reckoning the short-term trend is still up. So, at some point, a buying opportunity will come. Whether that point will come today or tomorrow or day after is difficult to say. So, we are not buying yet, but the view still remains that we would be buyers. We have shifted the threshold to 4,950. So far as the markets remain above 4,950, the idea would be to go and buy the dip,” he elaborates.

Voicing the same opinion, Saurabh Mukherjea, head-equities at Ambit Capital says, there is a ground for optimism in the near-term. “The central bank has taken a mystifying position. Leaving the RBI aside, I think the 6% bounce that we have seen over the last couple of weeks has been more global than local. The chances of the ECB intervention are fairly high. Looking further out into July, we are strongly open for a technocratic and more reform oriented FM. That should be another modest catalyst for the Indian market. I think there are grounds for optimism in the near-term. I don’t think we will have a run away bull market. But there is a ground for optimism,” he asserts.

Meanwhile, Ashok Wadhwa, group CEO at Ambit Holdings says, the market is and has been in a desperate and volatile situation for sometime now. “We seem to be in a difficult situation where the sentiments continue to be weak and people still don’t want to believe on the fundamentals of the market. They are looking desperately to cling onto good news as a surrogate to an otherwise fundamentally good market.”

Greece, Wadhwa says, in some ways, was a good news, but it was relatively small and therefore not relevant to the larger issue that prevails in Europe at this point of time. “For present, it is obvious that the Euro is here to stay. Should the ECB pump in more money, which is one of the great beliefs now, I think you will still see a market rally coming back. Over this month and then after that many more months, we will continue to remain in a volatile situation. Unless the larger issues are addressed, I think it is very difficult to predict how Europe will pan out and how European governments and central banks will look at the issues,” he explains.

Wadhwa advises most people to remain on sidelines. “Those who are prepared to take risks, the rewards could be significant,” he adds.

Unlike other experts, Rashesh Shah, chairman and CEO of Edelwiess Capital is not positive on the market. Shah says, the RBI action today has dampened sentiment a little bit. “Overall, I think liquidity is still an issue. Fundamentals and the macros, globally as well as in India, are still not improving. I don’t think the fundamentals will improve all through the year,” he adds.

To conclude, although experts are positive in the near-term, they are expecting the market to be volatile. Hence, one should remain cautious and take a call accordingly. 

Also read: See Nifty base at 4800, says Ramesh Damani

Vini Amesar.

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