Markets In Temporary Consolidation With No Price-Wise Correction, Say Experts

The Indian markets are in a consolidation phase but, according to market experts, they will continue their bull run in the long term.

Our target for Nifty is at 21,500 and it seems that it will continue the run towards it, Pankaj Pandey, head of research at ICICI Direct, told NDTV Profit in an interview. "Since the markets rallied about 3% last week, there is some bit of consolidation... We can't expect the market to keep inching up every week."

"We are not seeing any price-wise correction, and it's more of a time-wise correction," Ajit Mishra, senior vice president of research at Religare Broking, told NDTV Profit.

"We believe 21,800–21,850 will be the immediate support area, and if we slip below this, the current momentum may fade away...Then, the time-wise correction may turn into a price-wise correction."

Mishra advised maintaining a positive tone until "we break the 20,800-mark decisively." He added, "Underperformers like banking and IT are also participating in the rally."

Benchmark indices on Tuesday snapped their two-day rally and closed lower due to losses in the shares of heavyweights Reliance Industries, HDFC Bank, and Infosys.

Earlier in the day, the Nifty 50 hit a fresh intraday high of 21,037.90 points and the Sensex crossed the crucial 70,000-level in the second consecutive session.

The Nifty ended lower by 96.40 points, or 0.46%, at 20,900.70, while the Sensex lost 365.02 points, or 0.52%, to close at 69,563.51.

"Technically, limited activity has been seen in the market for the last few days," said Shrikant Chouhan, head of equity research at Kotak Securities.

"At lower levels, Nifty is regularly facing support near 20,950, while at higher levels it is regularly facing resistance near 21,030. Our view is that the current market structure is non-directional; perhaps traders are waiting for a breakout from either side."

In the cement space, the valuation gap between Tier 1 and Tier 2 is fairly large, according to Pankaj Pandey. Tier 2 companies, Sagar Cements Ltd., ACC Ltd., and Birla Corp., will see good momentum with some positive triggers, he said.

Pandey said that many things, like demand, are changing structurally for the real estate sector. "We are still in the early part of the cycle, as it lasts for around 5 years."

According to him, in the BFSI space, SBFC Finance Ltd., Spandana Sphoorty Financial Ltd., and Jammu & Kashmir Bank Ltd. will see positive momentum as they have set a stellar CAGR (compound annual growth rate).

Aligning the position with the overall trend seems to be the strategy, according to Mishra. "This consolidation might continue but these are the times to look for taking position in top-performing names."