Markets Seeing Healthy Correction, Don't Be In A Hurry To Buy, Say Analysts
The benchmark indices saw a sharp selloff in the last two hours on Wednesday after hitting new lifetime highs at open.
The markets are in a healthy consolidation after scaling new highs and investors should not be in a hurry to buy, according to analysts.
"We are probably in the last stretch for the Nifty rally," Jai Bala, chief market technician at Cashthechaos, told NDTV Profit on Wednesday. More evidence is needed to conclude that "the rally is over," he said. "We should avoid fresh positions but can hold on to the existing position with trailing stops."
The benchmark indices saw a sharp selloff in the last two hours on Wednesday after hitting new lifetime highs. The Nifty 50 declined 1.41%, the most in nearly 10 months, to close at 21,150.15, while the Sensex ended 1.3% lower, its biggest decline since Oct. 26, to end at 70,506.31. The selloff on Wednesday was broad-based, with all indices closing lower.
The current fall will be price-oriented across all indices as the markets were at trading new highs for consecutive sessions, according to technical analyst CK Narayan.
There is no need to panic, as there is enough money waiting in the system, Narayan said. "Even if the markets were to fall, in the longer context, they will be 200–400 points, which will not be significant to the bigger trend that has been going on."
The markets will remain in consolidation and 21,600 will be the immediate future for the Nifty, according to Narayan.
Dilip Bhat, director of Padigree Advisory, said these kinds of corrections are healthy for the market considering the recent run-up. The strategy, he said, would be to hold on and not be in a hurry to buy.
Banks, Auto Spark Concerns
The concern is coming from the bank and auto indices and as long as they hold up, the markets will be in a safe zone, Bala said. The breakdown for the banks comes at about 46,800 levels, he said. "If they go below this level, it can cause a recession for the overall market."
According to Rajesh Palviya, senior vice president of research at Axis Securities Ltd., confidence in the market will be a little shaky in the near to short term for the Nifty and Bank Nifty. The critical support for the Nifty is at 21,250, he said.
Disclaimer: The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
