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Analysts views on where the market is headed
July, 06th 2011

Market is expected to remain in a trading range: Prashant Sharma

What do you make of the recent strength and do you think Indian markets have turned the corner for the year?

I think most of our views that we have been carrying stay as they were. Besides global issues, such as problem in the euro land, US, China, India has its own share of issues if the headwinds continue for example inflation, interest rates, policy slowdown leading to a growth slowdown, inaction in lot of front, the headwinds though receding a little bit but continue to stay as they were.

So we are broadly cautious on the markets while we think the valuations have corrected and the markets are not looking expensive from a slightly longer term perspective but in the near term we think the headwinds persist and we would look for some concrete resolution of those headwinds for us to get more positive. The markets did bounce back after correcting quite significantly and I think it was expected.

The crude reversed its strength and as a result of that India rally a little bit from the previous month lows. So the market will probably continue to remain in a trading range and you will get your buying opportunities and you will get good opportunities to sell stocks given that you do not have a medium term confidence in the markets.

What could really the nudge the needle for the markets on the upside?

My personal belief is a more concrete evidence of the capex growth picking up. For me the biggest negative as of now in the markets is a capex slowdown. I would think more concrete evidence from the government, from the policy makers to kick start the capex cycle would probably turn me extremely bullish on the Indian markets.

We think the infrastructure story in India from a longer term perspective remains extremely robust and that is what I would want to play but, however, having said that the capex slowdown is quite visible as of now. There are concerns about how long can this slowdown last, however, if there is a positive surprise in terms of some things happening which will boost the capex growth will turn extremely bullish.

5700-5600 is the trading range for Nifty: Sudarshan Sukhani

What is your overall call on the Nifty?

The bigger picture is that after a sharp 500-point gain, we have gone into a trading range. Now this is not surprising. This is the nature of the Nifty. Actually it is the nature of most tradable instruments. You go through a period of expansion and then you go through a process of contraction.

For Nifty it is more pronounced. Now we have a trading range with almost well identified levels, 5700 broadly on the upside and 5600 on the downside. Inside the trading range, we can talk about it, demand an immediate resolution because we want some activity and some action but nothing will work out. The market will behave as it does and when the market wants to move out of this range, it is only then we will see a significant move on either side.

So the correct trade here is do not do anything. You know what is happening now, we are looking at 5-point moves. In another 2 days, we will start thinking of a 5-point move as a major trend but it is not, it would not even take your transaction cost.

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