The market on Wednesday posted a stellar surprise rally with both benchmark indices gaining 1.8 percent from previous close. The Sensex was up 520.91 points or 1.9 percent at 28050.88 and the Nifty gained 157.50 points or 1.8 percent at 8677.90.
Market expert Dilip Bhat, Joint MD of Prabhudas Lilladher, says the market euphoria is in line with movements in global indices – the US market was in the positive, some of the European markets too.
However according to him ‘caution’ still remains the watchword for next fortnight or so and one should wait for the US presidential elections to get over before making fresh commitment to market
Ashwani Gujral of ashwanigujral.com is the view that the market is likely to retest the earlier highs.
Discussing stocks and sectors, he said one can stick with banks or rate sensitives.
"From the banking space, one can look at SBI, ICICI Bank and Axis Bank because the leadership is securely in hands of rate sensitives," he said.
Talking about the rally seen in housing finance space, he says usually if some sectors get off the blocks strongly, they tend to hold on till the end of rally – so names like LIC Housing, DHFL, Can Fin Homes within NBFCs look good.
From the public sector banking space, besides SBI, Union Bank compels attention and could go to levels of Rs 160-165 coming back, says Gujral.
Apart from PSBs, media stocks like Zee Entertainment and Sun TV too look good. From financial space DHFL has been making new highs and could have good run going forward too even from these levels and could see levels of Rs 400-420.
Anand Tandon says market is very confusing because till today they it has been moving sideways and suddenly a rally like today makes it difficult to understand. So, in fact it is a good opportunity to get out of stocks which have been overpriced and wait for weaker day to buy. However, if one wants to stack up on stocks then only momentum players should do that.
Tandon does not recommend buying a lot because most of the companies have run up a lot and one needs to wait for the earnings to be reported.
According to Sanjiv Bhasin of IIFL, yesterday was a day of adventurous shorts and in fact, foreign institutional investors (FIIs) on the futures side were also huge buyers. "So, there was a misappropriation of stocks, which was there and for the few days there was more selling than buying. However, that has got arrested today and smarter hands have reentered, which has led to the euphoria."
A stable rupee, bond yields almost at seven-year lows and corporate deleveraging makes India arguably the best place to be in, says Bhasin, adding that the dip seems to have been bought with a vengeance for today.
He also expects the earnings for the second quarter to be good with most banks and micro finance companies likely to report better net interest margins (NIMs). From the autos too, Maruti will show strong volume growth, which will set the trend for auto numbers.
For the entire discussion, watch video