May 09, 2012 10:48 PM IST | Source:

Market Analysis: Is it time to bring out the shopping cart?

With the Nifty back below the 5,000 level, are Indian equities an attractive option now?

Moneycontrol Bureau

We are only halfway through the week, and it’s already been a rollercoaster ride for Indian equities.

The indices started trade on Monday on a weak note, but positive announcements from the government helped the Sensex post a 400 point recovery to end the day in the green. However, come Tuesday, the rally fizzled out and equities resumed their downtrend once more.

Today was no different either. Though losses were not as severe, the situation remains sober as a convergence of negative factors weigh down on sentiment. Due to the uncertainty in predicting the market’s next move, investors prefer cashing in their profits and staying on the side till volatility cools off.

The Sensex, which is down over 600 points in the last three sessions alone, closed at 16,479 today, while the Nifty fell 25 points to end at 4,974.

Keeping the market on tenterhooks are the concerns emerging from the euro zone. Election results in Greece and France sent global stocks tumbling on fears that Greece’s bailout deal may not hold. Back home, policy paralysis and the twin deficit problem further added fuel to the global risk aversion mentality.

But with the Nifty back below the 5,000 level, are Indian equities an attractive option now?

S Naren of ICICI Prudential believes so, but says that economic factors are still playing mind games. “If we can get a handle on the fiscal and current account deficit, we are due for a good rally,” he said.

Punita Kumar Sinha of Pacific Paradigm seconds his stance, saying that “this correction may actually provide potential entry points from a long-term perspective.”

For the near-term, however, the view is that the market is going to be stuck in a tight range. Sudarshan Sukhani of believes the market is sliding towards 4800, but says there will some small relief rallies.

Sandeep Shah, CEO of Sampriti Capital also cautions that Nifty may correct to 4,600-4,800 levels if global and local situation deteriorate further.

So while equities are starting to look attractive right now, the fact remains that the market can surprise on both sides.

Anisha Mappat

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