Markets Need To Spend Some Time In Consolidation Phase, Says Analyst

Indian markets erased all their gains in the last hour of the session on Tuesday and ended little changed from Monday's close. The market may spend some more time in consolidation and investors should be cautious and look at individual stocks or sectors, according to Aditya Agarwala, head of research and investments at Invest4edu.

"I think it is more about consolidation. I won't read too much into yesterday's decline and today's up-move because, after the pullback, we have seen the markets need to spend some time in the consolidation phase... Maybe tomorrow also, we will see a very narrow range on the index," Agarwala told NDTV Profit.

On Tuesday, the NSE Nifty 50 ended 5.65 points, or 0.02%, up at 23,264.85, while the S&P BSE Sensex closed 33.49 points, or 0.04%, lower at 76,456.59.

During the day, the Nifty gained as much as 0.56% to 23,389.45 and the Sensex gained 0.48% to 76,860.53.

Investors could avoid trading the Nifty for the next two days, he said. Nifty Bank has also been in a narrow range, which has made Agarwala cautious. However, with the broader markets being overbought, investors need to focus on individual stocks or sectors instead of indexes, he said.

With the government taking charge, new themes will start playing in the market, said G. Chokkalingam, founder and managing director at Equinomics Research. The railway and defence themes have already played out, according to him.

Agarwala, on the other hand, said that there are certain pockets in the railway sector that can continue to outperform. Texmaco Rail and Engineering Ltd. and Indian Railway Catering and Tourism Corp. are some of his top picks.

There is still more room in the electric vehicle segment, according to Chokkalingam. Agarwala disagreed, saying that most stocks in the segment have played out and the risk-to-reward ratio is very low.

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