Market next week: It's time to be cautious now, say experts

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Moneycontrol Bureau:

Looking at the market screen, investors have many reasons to rejoice. The level at which the Indian market is today, no one would have even dreamt of it at the beginning of 2012. 

Today, the Nifty touched a seven-month high surging past the 5,600 level. However, profit taking in the last hour of trade took some gains off the index.

The Nifty closed well above the 5,500 mark with a gain of 42 points. The Sensex too ended in the green and comfortably so at 18, 289, up 135.36 points or 0.75%.

The experts are getting wary now.  After the recent run up, they are expecting the market to take a breather and consolidate, if not correct.

Amisha Vora, joint managing director of Prabhudas Lilladher is cautious. According to him, the market might hold up and the expiry maybe positive, somewhere closer to 5,550 to 5,600. "We will be heading into March with two months of strong run. We have a lot of events in March- election results, economic survey and then the Budget. So, March compared to both these months will be a dull and volatile month. One needs to be cautious from hereon," he explains.

David Pezarkar of Daiwa Mutual Fund is worried too. "Since we have had such a sharp rally, I would think that the market needs to consolidate just a little bit before making its next move. So, I would expect a little bit of a correction or a consolidation," he adds.

Although Pezarkar is still optimistic on the market per se, he feels it's going to be more of bottom-up approach. "I think investors will have to be a little cautious now and pick the right stocks rather than the high beta sectors per se," he advises.

Ajay Bodke, head of investment strategy and advisory of Prabhudas Lilladher holds a similar view. "The rally could take a shallow breather from now, because the fundamentals and valuations are still trying to catch up with sentiment," he explains.

Also read: Go buy it! Valuations still reasonable, says ICICI Pru

However, on a positive note, Sudarshan Sukhani, s2analytics.com says, the trend will not change till the benchmark index is above 5,500. "The trend has not changed. Nothing will change till we stay above 5,500," he asserts.

But one should keep in mind that the markets don't go up or down in a straight line, they have to pause or consolidate. One should not get carried away.

Vini Amesar.
vini.amesar@network18online.com