Mkt heading to dead zone; see 5% fall ahead: Anand Rathi

Sandeep Shenoy of Anand Rathi Financial Services believes that the market is likely to see a time correction given the lack of major triggers. He expects fall of around 5 percent until third quarter earnings arrive.

"We are headed into a dead zone. So, our time correction has to happen and investors have to be prepared for that and that is just a part of the cycle," he added. In an interview to CNBC-TV18, he said that the recent movement seen in midcaps is sporadic buying by small investors. Below is the verbatim transcript of Sandeep Shenoy’s interview on CNBC-TV18 Q: Have you already seen the highs for the year? A: I think preliminary indications convey that we may have seen the high for the shorter time because of the triggers that we see and also the major part of number flow from Nifty companies, which are going to drive the index are over. More or less they were on slightly pleasant surprising side and that is where we have seen the reflection of that in the indices. We may have to give up some of the gains up till 5 percent because from here till next trigger, which is going to be the Q3 numbers, I think we are headed into a dead zone. So, our time correction has to happen and in that time correction probably we may lose 3-5 percent, so investors have to be prepared for that and that is just a part of the cycle. Q: Some people are taking it as positive that yesterday while the heavyweights ended at the day’s low and lost over a percent, the midcaps rouse by a similar percentage and ended at the highs so should one see it as merely people allowing a valuation catch up? A: We try to cling at straws in the wind. Around Rs 50 drawdown in Tata Consultancy Services (TCS) is more than what you can see in the entire midcap index; its not a catch up game, its some kind of a game being played out mentally by small time investors because large level investors – I do not think they are going to be deep trolling into midcap at least for six more months. So, it is going to be just sporadic buying because the marketcap of the midcap and even the larger upper end midcap which are close to billion dollars, I do not think move any needle right now.