Volatility to continue; go long on bank stocks: Experts

The market mood was sombre on Thurdsay, with the Sensex dipping 285.92 points to close at 19804.76, and the Nifty at 5907.50, down 83 points. Market breadth was not healthy either, with 847 advances and 1406 declines.

This disastrous end to the July series has not surprised experts. Sudarshan Sukhani of s2analytics.com says that this kind of decline was expected. “We have been saying that the intermediate trend is down, and that it is only the short-term trend that is going up and at some point it will end. It seems to me that the short-term trend has now changed to down. ” Sukhani advises traders to go short or sell. “Traders should be short and if there is a rally today or on Friday , that is a perfect location that you want to start building short positions. That is the view broadly for August.  There will be ups and downs, and obviously rallies declines, but broadly August should be weaker.” Experts feel that negativity has been factored in the market as expectations of a rate cut in the RBI policy on July 30 are null. Siddharth Bhamre of Angel Broking says, “I don't think anybody on the street is expecting a rate cut. So the negativity is already there in price and that is the reason index has corrected significantly. I won't suggest to short Bank Nifty, or banking stocks, because negativity is already in the price. Many people have spoken that the movement which happen on expiry day is not a trend setter so ignore it and go long in banking stocks.” But volatility is expected to continue, whether it is the Bank Nifty or  larger market indices like the Sensex or Nifty. Dilip Bhat of Prabhudas Liladher says, “The steps RBI has taken, if as the finance ministry believes they are short-term, they will possibly lead to a lot of volatile price movements.”