Go short till 5,750; bet on pharma, avoid PSUs: Experts

The BSE- Sensex closed trade at 19,348.34 , down 244.94 points while the Nifty fell 77.05 points to close trade at 5,754.60. With the Nifty below the 5,800-mark, Sudarshan Sukhani of s2analytics says that the trend is not surprising.

"Clearly, the markets are in a downtrend. Investors should be positioned on the short side. The Nifty at 5,750 has a very strong support zone. Unless something unusual happens, this is the point at which the Nifty should pause a bit before turning choppy. This is probably the time when profits should be booked on short positions," he told CNBC-TV18.

On the reason for the market’s disappointment, Tirthankar Patnaik, EVP - institutional sales, Religare Capital Markets explains that that the central bank’s decision to leave rates unchanged may have been viewed as  dovish and inadequate to either stem depreciation in the rupee or abandoning the currency to its fate. "This ambivalence might have probably spooked the market."

With the rupee returning to the 60-mark, Tirthankar Patnaik estimates the currency to rule in a 58-to-62 band. "However, the rupee has a downside bias because I believe the weakness in the currency is not domestic in nature."

On Dr Reddy's Laboratories, Tirthankar Patnaik says that the revenue declared came as a negative surprise. "Though I remain positive on the pharma space and favour Dr Reddys along, Sun Pharma and Lupin. Overall, the fall in revenue is a cause of concern.”

Recommending investors a strategy for PSU banks, Patnaik says, "Over the last three quarters, I have maintained that PSU banks cannot be part of core holdings. PSU-bank stocks are lucrative only during earnings season when there are trading profits to be made."

On whether concerns on the monetary policy and the rupee have lowered the range for market movement, Patnaik adds that this will happen only when FMCG stocks capitulate. "The FMCG sector is most sensitive to worries regarding growth and stiff interest rates."