Weak market: Where can you take money off the table now?

It's a bad close to the week. The market slipped off from the early gains and has only been going downhill ever since. A whole host of disappointing macro economic data including weak PMI data from many countries across the globe dragged the bourses down. The Nifty shed 82 points and lost its hold on the 4,900 mark. The Sensex fared worse losing 253 points to end below psychological mark of 16000 at 15965.16.

So, where would you take money off the table from?

Dipan Mehta, Member BSE and NSE advises that one could go light over the weaker quality stocks, the ones which are extremely leveraged and cyclical could be avoided. He continues that positions in banking stocks can be clipped while exposure to export oriented stocks can be increased as business in that sector is likely to benefit tremendously with the rupee depreciation.

Mehta is concerned that India has almost reached stagflation with high inflation and slow growth while June will completely be focused on Europe and monsoon.

"I think the news flow, sentiment, confidence level suggest that we should be prepared for some kind of a hit in the next two, three weeks or so. We should be prepared for it in terms of either buying puts or atleast getting into some cash at this point of time or atleast avoiding the temptation to buy into stocks no matter how cheap they maybe," he adds. 

Amit Dalal, Tata Investment Corporation says that it is always good to buy in correction but one has to bear with the pain that occurs in correction.

"Corrections don’t end so fast they take a while to remain in the markets, for the markets to go up again. But at every fall, for long-term investor, it is perhaps not bad valuations to look at equity selection and equity investment also," Dalal explains.

However, Sudarshan Sukhani of s2analytics.com feels it’s much better to take fresh positions on Monday.

Shifting focus to the F&O, the June series has not seen a strong start. According to Manoj Murlidharan Vayalar of IIFL Premia 4840-4800 definitely will hold on. “Till the time the VIX does not cross 27.3 levels on a closing basis we do not feel that Nifty might be drifting below 4800 though short-term levels for Nifty would be 4800 to even 4920 possibly,” he adds.

What added to the weakness today?

According to Amit Dalal poor fourth quarter GDP have spelt out the situation and perhaps even taken away any belief in the upside from here for many investors.

"Till now we haven’t really seen large FII selling, so this could be the beginning of that because from January to March we had substantially large flows. Even though we have considerably negative news from March onwards till now, the net negative number of FII was not substantial. Therefore, now that we are seeing a selling it could be an across the board or even an ETF selling which would result in many of these stocks taking some kind of beating," he elaborates.

Nasrin Sultana

nasrin.sultana@network18online.com