Sandeep Shenoy of Anand Rathi Financial Services is certain that the market will first trend downwards before it moves up because all the positives are already factored in. He sees Nifty first going to 6000 before embarking on an upward journey.
"Once the euphoria of the election results gets passed and absorbed by the market you are going to see a slow and steady profit booking, which could get accentuated in days to come,” he adds.
According to him the next trigger for the market is likely to be Q3 results, on back of better than expected Q2 performance.
One can stay invested in top stocks from IT and auto sectors, which are likely to outperform, as well as only in those midcap companies where cash flow generation is intact, advises Sehnoy.
Also read: Nirmal Jain sees 5-7% upside for Nifty; picks 5 midcap bets
Below is the verbatim transcript of his interview on CNBC-TV18
Q: It seems as though the election outcome has played out as well as the jobs data from the US was positive. In terms of stocks now going into the national elections, what would you possibly be recommending?
A: I think we have got everything which is possible on the positive side discounted in the market at the current juncture. So obviously some amount of easing or the sideways movement with a downward bias has to occur in the market and I think that is what we are going to see.
We have seen a big bang opening there, may not have been warranted but I think slowly and steadily once the euphoria of the election results gets passed and absorbed by the market you are going to see a slow and steady profit booking, which could get accentuated in days to come.
In this kind of a scenario, it just makes sense for a long-term investor to get out of weak stocks and align yourself for the next round of buoyancy in the market which when comes the first set of stocks which will be moving will be the ones which have got prima donna status in the sectors that is a top-end of the stock or else it could be the upstart midcaps.
Other than these two, I don’t think you are going to get pockets of out performance. So investors have to be a bit careful.
Q: By way of stock names which ones would you recommend?
A: I would not want to get into specific names but probably like IT sector at the upper end and auto sector at the upper end would be the better stocks to stay invested in at the current juncture.
In midcaps whatsoever maybe the sector, look for companies with cash flows - growth may come or growth may abate but look for those companies whose models are not structurally impacted and who have got decent amount of cash flows. We have got more than two dozen stocks which fit that parameter. It makes sense for people to latch on to them.
Q: Would you have any targets for the Nifty or any sort of broad movement which you would expect on the Nifty in the next two-three months at least?
A: I think just a few days back we were of the opinion that market may not make a new top in this year and obviously it has made it because of the newsflow that came but we still belong to the camp that market has to ease some and may have to come further close to 6,000 levels on Nifty before it embarks back on its northward journey.
There will be some downside before the next trigger, which should be the Q3 numbers, which we could be seeing some positivity building up on the Q2 number, which were decent enough. So till that time, I think it is going to be a downward bias with volatility, but yes, downward bias is very discernible.
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