Road ahead: Consolidation before rally

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The markets have been trading rangebound for the past few sessions. A number of experts see the markets consolidating, before breaking out on the upside. But global cues are weak at present, there is talk of a withdrawal of stimulus, and further rate tightening by central banks, so where are markets headed?

Shankar Sharma of First Global says the markets were due for a rally. "The best part of the trade is already over." But was quick to add that the Sensex can go up by another 200 points. "I thought they would go to 16,800 or so, they have gone to 17,000, which is again pretty okay. They could easily go another 200 points or so higher from here. Now, you are playing for too little in the market."

Caution is what Deven Choksey of KR Choksey Securities advises currently. He expects the Nifty to trade in 4,900-5,150 range. According to him, if the upside in the Dow continues, then it could force some funds to withdraw money from markets like India. "That could possibly bring down indices to a certain extent in the coming trading days. If the buying activity halts for a while, then probably local traders, who are sitting and waiting for an opportunity to storm the market, would also get active. From that perspective, you may see market dipping thereafter. Maybe one will have to closely watch the current levels at around 4,990-4,970 levels. If we break this level, then we may end up seeing a level of about 4,900 or even lower than that."

Jagdish Malkani, Country Head, Taib India, too feels the market is running out of steam. "The market is confused which way to go."

But Trader Atul Suri is not pessimistic on markets. He feels markets can make new intermediate highs. "Global equity markets are expected to go substantially higher. The Nifty can hit 7,050 levels in 1-2 years." He says 4,550 levels should act as support in case the Nifty pulls back.

Gautam Vora, Director, ULJK Securities, sees 5,200 as the next target on the Nifty. "There is resistance right now at 5,080, which was the last high. The second it breaks 5,080, the shorts will come into cover and then take the market up to 5,200 from there. We expect that dollar index (DXY) to crack the 75 mark. If it does, it should go down to 72 levels. In that case, there will be a lot of outflows of money from America and abroad to emerging markets and commodities such as oil. Oil could go up to USD 82 per barrel. If it crosses USD 82 per barrel, there is no stopping it till about USD 96 per barrel. If that happens, then companies like Reliance will benefit greatly. Just through those kinds of earnings, the market could shoot-up from 5,200 to maybe 5,400." He does not see the Nifty sliding below 4,900 if the dollar does make a rebound.