BSE Sensex at 28-mnth high: 4 things 'not to do' right now

Moneycontrol Bureau

Benchmark indices surged over 2.5 percent to a 28-month high. The Nifty added a solid 151 points to close at 6,146 and the Sensex rallied 490 points, closing comfortably above the 20,000 mark.

The rally was led by sectors which stood to gain from a declining interest rate. Hopes of another rate cut rose after yesterday's inflation data pointed to a declining trend Both public sector and private sector financial stocks soared in today’s trade.

So, what are the things that one should avoid doing right now?

Don't be buyer right now: Tirthankar Patnaik, Strategist & Economist does not recommend buying in the market right now unless earnings are sustainably better going forward.  In an interview to CNBC-TV18, he said that the market is probably right for some amount of profit booking because we are not seeing clearly earnings moving up. "First half of the earnings fared really well. This is essentially a repeat of what we saw on the third quarter. First half was fairly, second quarter was disappointing," he elaborated.

Don't get into beta stocks: It is advised not to get into high beta stocks unless growth numbers really change as a lot of the rallies have been driven by defensives at this point. “This is not a beta rally. To our end, in terms of profit booking, we will recommend selling out of private banks IndusInd Bank ,YES Bank -they have done very well at this point. Some amount of money could be taken off the table at this point,” Patnaik suggests.

Don’t be bullish on banking stocks: Though the Bank Nifty touched a 30-month high, experts feel one should be cautious on the sector.  Analyst SP Tulsian said, “I will be bit cautious because whenever you see profit coming in, these stocks get hit very swift and fast. So, yes caution is required now at the current level on these stocks.”

Don’t bet on infra stocks: Lot of stocks jumped today including laid back stocks which were forgotten earlier. Analyst Sudarshan Sukhani warns that 5-6 percent gains are very easy to come by but not sustainable. “We should stay on the blue-chips. I would be much more upbeat on infrastructure stocks like IDFC. I wouldn’t go for any other stock in this group. These 5-6 percent gains are very easy to come by but not sustainable. This is just a warning,” he said in an interview to CNBC-TV18.

Nasrin Sultana
nasrin.sultana@network18online.com