It is time to get a little defensive, say experts

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Moneycontrol Bureau

Volatile! That would be the best way to describe today's session ahead of the outcome on Greece's debt deal. The Nifty made many attempts at reaching the 5,400 level but was met with resistance throughout.

After an extremely fickle last hour, the Nifty closed the day at 5,368 gaining 33 points while the Sensex too put on 84 points to shut shop at 17,707.

The meeting of the Greek PM with leaders of political parties supporting his government to negotiate the bailout terms is expected to take place today. The meeting was postponed yet again yesterday, due to delay in paperwork.

But the good news for Greece is that European Central Bank too has agreed to take part in the Greek debt restructuring. According to a Wall Street Journal report, though the ECB is still refusing to take a 70% haircut on Greek debt, it will exchange the Greek government bonds it purchased in the secondary market last year at a price below their face value.

Back home, it is clear that the edginess is creeping up in the market. Yesterday, we saw a little bit of a slip, not remarkable, but we did go to 5400 for a while came down to 5330. Today, we have once again seen a very volatile trade even though European markets were pretty steady. That is where the epicenter of the world problem lies. Therefore, one wonders whether it is just Greece that the market is worried about.

There are two views out there, bulls and bears, who now believe that the market should at least pause and consolidate before heading higher. Aditya Agarwal, senior derivative analyst at Way2Wealth advises to wait for a while before making any fresh long positions at these levels. "We expect Nifty to come down to 5280-5250 level. That will be a good level where one can again go long with a target of 5400 and if that is broken, then 5500-5550 levels," he said.

Shares of Bharti Airtel were under stress today after the telecom major posted yet another quarter of lower net profits. This time, the villains were a surge in depreciation and tax expenses.

Also, ONGC delivered muted third quarter numbers wherein profits declined 5% to Rs 6,740 crore despite a higher than expected royalty reversal of Rs 3,140 crore.

Now, while this has not been a terrible earnings quarter, in terms of overall mark down in earnings, one will still have to sit down at the end of the quarter and have to take earning estimates for quite a few companies a few notches lower. But the market is not feeling too bad-maybe partly because of where prices are right now-about the Q3 earnings.

Going forward, according to Prashant Sharma of Max New York Life, it is time to get a little defensive. "The biggest trigger for Indian markets going forward, if I take a 12 months view, would be the resumption of the infrastructure cycle. Once that is sorted, most our problems get mitigated to a great extent. So if infra cycle picks up in the next three-four months, we are in for a good bull market. But if that takes longer to revive, the Indian economy will continue to struggle."

Sagar Salvi
sagar.salvi@network18online.com