Experts see more pain for mkts, suggest strategies

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS Nifty recovers sharply to close flat; ONGC, Bharti, HUL up See downside risk in global mkts: Bank Julius Baer Mkts likely to bottom out close to Budget: DSP ML

It was a very volatile trading session. The Nifty fell below 4,700 but ended the day flat. A strong European market helped to pull up the Indian indices. Banking and telecom stocks saved the day, but metals bled under heavy selling pressure. Among individual stocks, Jubilant FoodWorks was the star after its spectacular listing. Volumes of over 1,10,000 crore were clocked in. So, where is the Nifty headed?

 

Technical Analyst Rahul Mohindar of viratechindia.com does not see the Nifty clawing back above 4,900. He feels the markets will see a new low. "The minute we get to 4,850 levels, we will see pressure coming. I think there is a newer low to be conquered."

Jagdish Malkani, Country Head of Taib India, too shares Mohindar's view. "On every bounce, you can see there is a whole bout of selling that comes in. There are still a lot of jitters in the market. I don't think we are through the blood-letting." He feels the global situation will get worse before it gets better.

 

However, Dipan Mehta, Member, BSE and NSE, feels the markets are done with downsizing for the time being. "The fact that Europe has stabilized and bounced back means that the fear relating to sovereign defaults seem to have abated at least for the time being. But don't expect any fireworks on the upside."

 

He sees the markets getting into a range of maybe 4,700 at the bottom and 4,900 at the top. "It may continue trading in this range for the rest of the month or maybe closer towards the budget you could see another bout of volatility where the markets could start trading higher based on expectations of budget proposals."

 

Strategies to trade markets:

 

Retail investors, Malkani says, should go in for defensives, fast moving consumer goods, and IT. "The IT sector looks probably the first to rebound. It does look like the worst is over for it and there are not many expectations from the Budget."

 

Mehta asks investors to buy into existing portfolio stocks which may have corrected 15-20% or where results have come in as per expectations or where there is good earnings visibility. "If the market were to correct even further, one could increase their buying. We remain convinced that we are back in a bull market and these are few weeks of correction. Sooner or later we will see the market correcting or turning around from these levels because the liquidity still remains quite strong and the underlying fundamentals also continue to improve for our economy and the globe as a whole."

 

Speaking on what strategy F&O traders should adopt, Mohindar says, "If we break 4,750 Nifty, let's go short. A good 100-120 point move on the downside can be traded into. Alternatively, as we head to the resistance of 4,850-4,880, that's a point where you can initiate a short but directionally this is a relief rally to sell into."