After weeks of relentless rally, Sensex takes the leap and recaptures the magical 20,000 for the first time since January 15, 2008. Keeping up the momentum Nifty too touched the 6,000 mark. At the end of the day, Nifty closed up 28 points at 6,009 while Sensex is up 95 points shutting shop just above 20,000.
Though there is euphoria engulfed around Dalal Street on the back of the huge upswing seen on the bourses lead by heavy FII buying, the big question remians is there room for further upside movement on Indian indices?
Both, Dipan Mehta Member of NSE and BSE as well as Ajay Parmar, Head of Institutional Equities at Emkay Global Financial Services expect a correction so that the markets stabilise.
However Mehta is quick to add that in case the FII flows and Nifty futures keep up the present trend, the rally can continue “because there is no idea as to how much short position is there in the options market nor as to the appetite or the extent of funds which FII’s can invest in our markets”.
The correction call
When will the supposed correction happen? Strong FII flows that have been pushing the markets up, experts say need to be watched. “If you had to make a guess as to when this rally would sputter and move sideways or correct then there are two data points you need to watch out for—the Nifty future premium and the FII flow. The futures premium has to come down, maybe go into negative and the FII flow needs to slowdown or at least come to a more reasonable level.”
The money which is chasing more on the macro India stories because of which the largecaps have moved up will continue, says Parmar. To which Mehta adds should there be a slowdown over there then that could be a negative signal.
How much can we tweak?
One should look at 600-700 points correction on the Nifty, says Mehta, “but that’s not going to happen in matter of two or three trading sessions; it would be a gradual process. Of course the first wave could be a bit sharp and there after you could see some consolidation and maybe further down move as and when the correction does take place.”
Trading strategy
Technical analyst Rahul Mohindar of viratechindia.com feels the approach now should be keeping a stop at 5,940 and maintaining long positions. “My sense is we would probably head to about 6,120 in terms of a price target in the near term.”
But to Parmar, this market does not give an alarming signal that he should reduce my position yet. “I should move from smaller cap stocks to midcap stocks and midcap stock to largecap stocks. I should reduce my risk levels and maybe churn my portfolio from one sector to the other. Otherwise I would put the same weightage in cash versus equities.”
Though there is euphoria engulfed around Dalal Street on the back of the huge upswing seen on the bourses lead by heavy FII buying, the big question remians is there room for further upside movement on Indian indices?
Both, Dipan Mehta Member of NSE and BSE as well as Ajay Parmar, Head of Institutional Equities at Emkay Global Financial Services expect a correction so that the markets stabilise.
However Mehta is quick to add that in case the FII flows and Nifty futures keep up the present trend, the rally can continue “because there is no idea as to how much short position is there in the options market nor as to the appetite or the extent of funds which FII’s can invest in our markets”.
The correction call
When will the supposed correction happen? Strong FII flows that have been pushing the markets up, experts say need to be watched. “If you had to make a guess as to when this rally would sputter and move sideways or correct then there are two data points you need to watch out for—the Nifty future premium and the FII flow. The futures premium has to come down, maybe go into negative and the FII flow needs to slowdown or at least come to a more reasonable level.”
The money which is chasing more on the macro India stories because of which the largecaps have moved up will continue, says Parmar. To which Mehta adds should there be a slowdown over there then that could be a negative signal.
How much can we tweak?
One should look at 600-700 points correction on the Nifty, says Mehta, “but that’s not going to happen in matter of two or three trading sessions; it would be a gradual process. Of course the first wave could be a bit sharp and there after you could see some consolidation and maybe further down move as and when the correction does take place.”
Trading strategy
Technical analyst Rahul Mohindar of viratechindia.com feels the approach now should be keeping a stop at 5,940 and maintaining long positions. “My sense is we would probably head to about 6,120 in terms of a price target in the near term.”
But to Parmar, this market does not give an alarming signal that he should reduce my position yet. “I should move from smaller cap stocks to midcap stocks and midcap stock to largecap stocks. I should reduce my risk levels and maybe churn my portfolio from one sector to the other. Otherwise I would put the same weightage in cash versus equities.”
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