Rangebound markets: What should investors do now?

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS Nifty ends with modest gains; RIL, Hero Honda, HDFC lead Don't rule out reverse repo hike in April: StanChart Bank Retail investors still cautious about markets: Emkay 2010 to see range-bound market: Edelweiss Interest rates, divestment programme key drivers now: Enam Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

It was another lacklustre trading session for markets on Wednesday with the indices stuck in a tight range. The Nifty ended the day at 5,116, up 14 points, while the Sensex shut shop at 17,098, up 45 points. The breadth continues to be weak at 1:2 in favour of declines. Volumes too were extremely lacklustre at Rs 83,400 crore.

With markets trading sideways, is it best for retail investors to sit out or should they invest now?

Despite the lack of direction, Ramesh Damani, Member, BSE, feels investors should stay invested in Indian markets. "The undertone is buoyant, corporate outlook is looking good. Managements are talking about expansion. So, it's a good time to remain invested. Bull markets will have corrections - it may start tomorrow, may start next week. You just have to ride the pain. Look at the broader picture. This country will change itself in 10-15 years. It is like investing in the US in the 1950s. You want to hold on despite wars - Korean War, Vietnam, Watergate - any number or events. The people who won were the people who held on to the Johnson & Johnsons and IBMs. So, may be we are in a similar trajectory in history."

Even Krishna Kumar Karwa, MD, Emkay Global Financial Services, said 4,500 on the Nifty is unlikely and that the markets are likely to continue to consolidate in the near-term. "Domestically, there are no reasons for the markets to go down to 4,500-4,600. For the next two months, there is no new newsflow expected from the domestic environment which can possibly lead to a crack in markets. The cracks in the markets will only come from the global cues and global flows. So, I don't think 4500-4600 will come in the next few months."

The market is not showing any signs of weakness, said Mitesh Thacker of miteshthacker.com. In fact, he sees it consolidating ahead of an upmove. "It is more like catching your breath before you again start an upmove. We have already seen an upmove of around 350-400 points from the lower side, which was before the Budget. Post that what we are seeing for the last 3-4 days is nothing but sideways consolidation. I am pretty okay with the market. Once it closes above 5,150, let us look for upside and probably even a re-test of highs of 5,300."

Sajiv Dhawan of JV Capital Services too sees no reason to fear. He advises adopting a buy on dips strategy in the short-term the trading call would be to buy the dips. "If the breadth remains negative for few days, then maybe we would have to look at that. But from our perspective, it has been a pretty decent run and nothing to be too worried about at the moment."

Deven Choksey of KR Choksey Securities too views the current market movement as consolidation, ahead of an upside rally. "If the market sustains above 5,150 levels, then we might be seeing 5,250 kind of levels. Otherwise, it should remain rangebound between 5,050 and 5,150 as of now."