Equity markets have shown signs of recovery, which may imply a range-bound movement and not a crash, according to Vijay Chopra, chief executive officer at Enoch Ventures Pvt.,
The markets may witness a correction since the gross domestic product numbers, tax collection and other fundamentals look positive, but they will not crash, Chopra told NDTV Profit.
Amid the recent advisory by the Securities and Exchange Board of India to mutual funds, Chopra said not many would pull their money out of mid-cap funds as there are many companies with strong fundamentals.
Among the steps suggested by SEBI, asset management companies and fund managers have been asked to consider moderating flows and rebalancing portfolios, according to an internal letter sent by industry body the Association of Mutual Funds in India to mutual fund trustees.
He said there are good opportunities in large-cap funds, with his recommendations being ITC Ltd., Hindustan Unilever Ltd., Pidilite Industries Ltd., HDFC Bank Ltd. and Kotak Mahindra Bank Ltd. He also recommended state-run mid-cap banks like Union Bank of India and Bank of India.
The markets are in a distributive phase. The broader markets will stay out of trouble if the Nifty Smallcap 100 stays above the 15,200 mark and the NSE Nifty 50 above 21,860, according to Jai Bala, chief market technician at Cash The Chaos. "If these support levels are broken, then markets can fall into trouble."
He said the Bank Nifty is recovering well and can achieve fresh records. "But it will still be a medium-term top impact."
The benchmark stock indices rebounded from a one-day slump to settle at record closing highs on Wednesday, led by gains in ICICI Bank Ltd. and Axis Bank Ltd.
The Nifty rose 117.75 points or 0.53%, to 22,474.05, and the S&P BSE Sensex gained 408.86 points or 0.55%, to end at 74,085.99.
"Global markets witnessed mixed signals ahead of the U.S. Fed Chair's testimony to Congress," Vinod Nair, head of research at Geojit Financial Services Ltd., said. "While it's widely expected that the Fed Chair may downplay the urgency for rate hikes, the possibility of hints regarding a potential rate cut trajectory cannot be dismissed."
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