Cautious on market, sell on rise: Prabhudas Lilladher

The Sensex rose 21.20 points to close at 17,257.38. The Nifty went up 11.50 points and ended at 5,240.50.

In an interview to CNBC-TV18, Dilip Bhat, joint managing director of Prabhudas Lilladher says, the market remains extremely vulnerable to the downside. "I would still remain circumspect. I think it would still remain a 'sell on rise' market for the short-term people or at best, selective buying needs to be done," he adds.

Meanwhile, Sudarshan Sukhani of s2analytics.com says, the market will not remain in a range for many days now, maybe for a couple days. "Next week, maybe the Nifty is going to make a big move. It could go up and break 5,250 and go significantly higher or it could slide below 5,200 and move towards 5,100 or lower. So, buy an Option straddle," he asserts.

Also read: Foreign investors continue betting on Indian stocks

Below is the edited transcript of Dilip Bhat's interview on CNBC-TV18.

Q: Do you think we will get anything out of the global cues either from the ECB or Fed? If we do not then is there a chance of a big trip up in markets like our own or have we already factored that in?

A: The fundamental perspective still remains unchanged. By and large, it still cast its shadow on the market in a very bad way. So, I am sure that market is rallying at the moment and taking cues from the global or even the domestic market. Reshuffle in the Cabinet and maybe the SLR cut are prompting the market to attempt a rally, which in my opinion probably will not push the Nifty beyond 5,300 or 5,400 maximum.

The market remains extremely vulnerable to the downside. Somewhere, on the way, it can weaken. So, I would still remain circumspect. I think it would still remain a ‘sell on rise’ market for the short-term people or at best, selective buying needs to be done. But one has to wait for the market to come southwards, if at all one has to make a real good picking out of that.

Q: How did you read the RBI's move yesterday? What was your opinion with regards to even the commentary?

A: I think that they were very clear in what they said. There was a lot of clarity in their logic. I think there are too many red flags out over there. The growth rate around 6.5% remains too muted to give any kind of optimism on the market. I think the inflation, even if you wish it away, is not going away.

What is also very apparent is that this 6.5% is not adequate neither to sustain the fiscal deficit nor the current account deficit. Both of them remain like a sour thumb for the market as well as for the government. So, the RBI has said the market will continue to be in this shadow. It’s going to be still a sell on rise market because on the upside market wouldn’t find too much of support.