Market is due for correction, book profits now: Experts

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Moneycontrol Bureau

The market optimism continues to grow. The Nifty kicked off the February series on a strong note, building on a positive start and closing with a flourish. It reclaimed the 5,200 mark with a 50-point rally. The Sensex gained 160 points to end at 17,233.98.

The market has staged a stunning performance for the fourth consecutive week. The Nifty has surged 12.5% in four weeks.

However, experts have started raising the red flags. They are expecting a correction now. They are advising investors to book profits and exercise caution ahead.

Portfolio manager PN Vijay says, the market has become overbought and a correction is surely warranted even for the health of the market. "I was extremely bullish about the market around this time last month, when the valuations were so enticing. One went into rate sensitives in a very big way anticipating some sort of a soft policy. But that's been discounted now. We have had such a huge rise," he adds.

Ambareesh Baliga of Way2wealth holds the same view. According to him, the rally could continue for a few days because of the momentum, but the correction is overdue. "It is time to book profits and exit positions. Buyers at these levels will be caught on the wrong foot," he warns. 

Baliga further says, "When the market does reverse, I see the Nifty falling to 4,800-4,850 levels. Investors should start buying again around these levels because the market will clearly be at much higher levels in four-six months. The upside for the current rally is around 5,200-5,250."

Jai Bala of cashthechaos.com also suggests investors to take some profit out. According to Bala, the pullback is going to come really soon and therefore one should protect  profits, if any.

For those looking to invest, Bala recommends 4,800 as a key level from a medium to long-term point of view.

Meanwhile, Vibhav Kapoor of IL&FS feels things are definitely looking much better than they were a few months ago. However, he advises investors to be caution. "We have been in this range of 4,550-5,250. Now we are approaching the top of that range. I would think that after a bit of consolidation somewhere in the next few weeks you should see an upside move from here," he adds.

Also read: Equity markets on life support, stay hedged, says expert

On the flip side, there are some experts who still believe that the uptrend is intact and the rally could continue.

Sudarshan Sukhani of s2analystics.com says, the market is in an uptrend. "In an uptrend prices go up, the Nifty is going up. Today, we had a choppy day simply because the market can not go up relentlessly without stopping or pausing. It is wiser to take positions and keep them rather than to try day trading," he explains.

Anand Tandon, chief executive officer of JRG Securities agrees. He says, the momentum is clearly on the upside. "The market has run up quite a bit. Why would you want to try and anticipate where it goes from here, you should just trade this trend," he advises.

Vini Amesar.
vini.amesar@network18online.com .