It's been a smart pullback on D-Street today after yesterday's sharp sell-off. Hopes ahead of the longer term refinancing operation (LTRO) announcement tomorrow lifted sentiment across the globe, and helped Indian market arrest their slide.
The Nifty pocketed 94 points to close well above the 5300 mark. The Sensex too followed suit with a huge 285 point gain shutting shop at 17731.
So, is the correction over for now?
SP Tulsian of sptulsian.com feels that major correction is over and the market will continue to move upwards till Budget. Agrees Sudarshan Sukhani of s2analytics.com that there is more upside of atleast 100 points. "Whether it comes about or not is different but since we go by the charts the rally seems to be ready to deliver more," Sukhani adds.
However, some experts feel that today's rally is a run up in anticipation of the European Central Bank's LTRO. Expected on February 29, the second round of liquidity burst coming from Europe could once again drive the emerging markets.
"That could be a very significant coupled with the fact that China continues to maintain a loose monetary policy and internationally we are seeing that this year is going to be year of liquidity. Right from Australia, Japan, Europe, US every major economy in the world is going to be pumping in liquidity this year. So this year is going to be bullish purely because of liquidity factors which is going to drive the market up," explains Abhijit Chakraborty, Sr. VP - Institutional Equity, Fortune Equity Brokers.
Nevertheless there are more triggers or speed breakers to the rally. March is a critical month as the UP election results expected on March 6, RBI credit policy review on March 15 and Union Budget on March 16. According to Chakraborty, the market is going to be extremely volatile just before Budget.
Elaborates Chakraborty that going forward one should be since we are entering into a very volatile period and there are too many events pulling the market in opposite directions.
"The first leg of this rally from January to February was led by these kinds of stocks but in the second rally which is starting today and it can be 5,600 or 5,700 in the next couple of sessions. I would be focusing on more solid names which have got earnings and fundamentals intact which could be slower laggards in this upmove but which will also provide some kind of a safety if the market does turnaround," he adds.
Meanwhile, pointing out that the market will continue to remain a little bit buoyant, Nitin Raheja, CIO, Rada Advisors feels that the market may face some amount of resistance of around 100 points.
Raheja advises to shift focus on infrastructure, construction area, and power. "You will see some kind of policy announcements in terms of trying to favour them or in terms of trying to improve the investment climate as far as these sectors are concerned. You might see something happening for agriculture, so some of these sectors will clearly benefit," he adds.
He clearly suggests to avoid aviation sector completely now.