Lack of short-term triggers may correct Nifty more: Expert

Q: What do you make of this wee-bit of consolidation that we have seen today?

Tandon: The market has been on the roll. We have had five days of uptick and we have hit new highs almost every day and so, it is not surprising that there should be some profit taking. In fact if you assume that the market were to give up some of the gains it will be even better because a lot of people would still be wanting to get in as you can see from the kind of mutual fund inflows that we are beginning to see.

Q: Back at 8,100; not much of a consolidation either on the flipside?

Joshi: Clearly yes, our expectations were that the markets would more or less cap off around at 7,950-8,000 mark for the lack of triggers but stock liquidity along with positive global cues including fall in Brent prices, easing off of the global political geo-tensions are reading the markets in a big way.

From an earnings perspective we have done reasonably well and from a valuation perspective the markets are trading close to 2.7 times price to book which is close to its historical averages and if I compare that with a peak averages of around 4.5 and if one assumes that the corporate earnings might increase with the kind of gross domestic product (GDP) data that we have seen at the clip of 18-20 percent you might have analysts or the bulls saying that there is a huge way to go for the markets.

So from a short to medium term perspective, we still feel that there are lack of triggers at least from the domestic side of markets though from a longer perspective we are extremely optimistic about the reform processes being laid out in the next few quarters corporate earning improving gradually and again the capital expenditure (capex) cycle reviving.

So all these factors would take the markets much higher from the current levels but from a short to medium perspective our take is that the markets might consolidate. Very difficult to say what the range might be because liquidity might push the markets higher to 8,200-8,300 levels but stocks specifics is something that we believe in the current juncture that the markets are poised at.