Forecasts

Bullish trend intact

Today’s correction was on expected lines. I would call it a technical, or a pre-budget correction. The market-breadth was quite weak. In the next major correction, the breadth could be even worse.

The market wide open interest in the derivatives segment was about Rs 60000 crore, which is on the higher side. It’s a combination of factors that called for today’s fall.

Though it was the last trading day of the week, I won’t attribute the correction to end of the week profit-booking as there were hardly any stocks which have put on high gains from their beginning of the week prices. The selling was actual selling and not profit-booking. Real estate stocks, which had gone too high on valuations, have been correcting in the past few days.

The correction in mid-caps today was much more severe than the large-caps in today’s trade.

The inflation rate came out higher than anticipated, and was on account of a hike in crude prices. Again, the position of crude supply in global markets is quite comfortable and the rise in prices is on the back of the news of an oilfield shut down in California, US. Again it’s a kind of sentimental impact on the price and not totally justified by economic rationales. The Government will step in and take charge of the situation to bring down local fuel prices.

I feel the bullish trend is intact and the Sensex will not top out before attaining 15,000 – 15,100 levels in the near-term. The Sensex most probably will not breach the 14,000 level on the lower side. I now see PSU stocks catching up with its peers.

Technical charts indicate a 'buy' on Wipro and Oriental Bank of Commerce. We also strongly recommend Automotive Axles and Datamatics Technologies to our clients.

There is a chance of the market opening weak on Monday as well, but the closing will most likely be positive.

- Bharat Gala, Technical Analyst, Ventura Securities


Market bullish in long term perspective

Falls or corrections like today’s are reminiscent of the market behaviour and market functioning. There is never a one way upward or downward movement to any equity/financial market. Today’s fall cannot be attributed to any single reason, say inflation data or in that case any other reason.

The volumes on most mid cap and small cap counters are nowhere near that of the large caps. That is one of the reasons that the mid cap and the small cap segment stocks exhibit more volatility, hitting circuits either way. Today’s severity of the fall being higher in the mid cap segment was a reflection of the same.

Even if the Sensex is to correct by 2000 points in the short term, I am bullish about the market from a 3-5 year perspective. The corporate sector is doing well and so is the economy as a whole.

- Tejas Doshi, Research Analyst, Sushil Finance