Market's near term rally is over: HDFC Securities

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Jaideep Goswami of HDFC Securities says that the markets have reached a level where there could be a correction of 300 to 500 points. But he says that should not be a cause for concern as the fundamentals are good.

He, on the contrary, feels that a 300-point correction will bring new investors and, with them, more money into the market.

Excerpts from CNBC-TV's exclusive interview with Jaideep Goswami:

Q: What do you feel about the markets? Now at 11,400, does it need to correct a bit more or are you okay?

A: I suppose the situation has come where we might see some correction. Nothing to worry though because the broad fundamentals are quite good. We may expect another round of strong numbers in the current quarter.

But probably market has done with its near term rally and we may see some correction coming in. We are seeing some buying happening in midcap stocks. They have rallied. But I suppose it's time to do some profit booking as well.

Q: How much do you expect by way of correction?

A: Anything between 300-500 points maybe on the extreme side. But probably correction of 300 points can bring new investors. Broadly we are seeing some buying coming from foreign investors as well. So better price level will bring more money back into the system. That is our thinking.

Q: Have you changed your call on oil sector in the light of the belief that crude might be cooling down now?

A: It is a difficult call. People have gone wrong so many times trying to take a call on crude prices. Obviously, if international tension flares up, we might see some spike in crude oil price.

Having said that fundamentally crude might have reached a level where it could stabilise for sometime. And if that backdrop continues and government raises some auto fuel price, there are better days ahead for these companies. But there are too many ifs in this discussion, so we would tend to be cautious and not change our view yet.

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