Market Ripe for a Correction: SAMCO Securities
The S&P BSE Sensex lost 0.2% while the NSE Nifty declined 0.2%, its lowest level since August 4.
Indian shares closed the first day of the September series lower as investors await commentary from the U.S. Federal Reserve Chair Janet Yellen on the trajectory of interest rates.
The S&P BSE Sensex lost 0.2 percent to 27,782; while the NSE Nifty declined 0.2 percent to 8,572, its lowest level since August 4. The market breadth was firmly skewed in favour of the bears at 964 declines, 512 advances and 68 stocks remaining unchanged.
“There is a little complacency that has crept into the market,” Jimeet Modi, chief executive officer of Samco Securities told BloombergQuint in a phone interview, with the India Volatility Index near a 17-month low.
After rising for five straight months, the benchmarks are poised to post their first decline in August, with the Nifty dropping 0.7 percent in value so far. “The time is ripe for a correction of around 3 to 4 percent from here on,” Modi said.
Foreign funds have bought a net $5.8 billion of local shares this year, the most in Asia after Taiwan and South Korea, as capital flows to emerging markets accelerated amid a wave of global policy easing. That has propelled the benchmark gauges at least 21 percent higher from the lows in February, and sent the index of small- and mid-cap companies to record.
Long-Term Trend Intact
While Modi sees a correction in the short-term, his long-term view remains bullish citing “ample liquidity in global markets”. In terms of technicals, he said the 50-share index has been making higher tops and higher bottoms, which is encouraging. “Every dip will be a good buying opportunity but one has to be cautious in terms of what one buys,” he said.
He sees value in some of the pharma and information technology stocks, and advises staying away from the private banks.
