Markets Poised For Bearish Trend In Short Term, Say Analysts

 Analysts suggested a 'buy on dips' strategy for investors as the stock markets look bearish in the short term, ahead of the interim budget and the outcome of the U.S. Federal Reserve meeting.

Banks remain the weakest pocket for the markets and the best thing for investors to do is to avoid it or be very careful about the picks, according to Jai Bala, chief market technician at CashTheChaos.

"Nifty is a bit ambivalent, but I think if the markets were to drop below 21,260 on an intraday basis, the momentum would pick up on the downside," Bala told NDTV Profit.

With a slightly higher time frame, it can be argued that markets are bullish and bearish, but "its bearish side has a slight edge over the bullish side," he said.

A positive buildup was reflected in Indian markets prior to the interim budget. Although expectations are low, the market anticipates a lower fiscal deficit, supported by buoyant tax revenues, according to Vinod Nair, head of research at Geojit Financial Services.

The benchmark equity indices ended on a positive note on the back of gains in the shares of HDFC Bank Ltd. and Reliance Industries Ltd. The pharma sector stood out with a positive earnings outlook and the Nifty Pharma recorded its highest-ever close on Wednesday.

The Nifty Pharma is still not done but is looking close to an important top and there may not be too much upside from here, according to Bala.

"The overall trend in the market is akin to a seesaw, and the buy-on-dips strategy is effective as of now," Nair said.

The expectations are much more than what is going to be spelled out tomorrow, and there will be some social schemes announced and layout for infrastructure and railways, according to market veteran Mehraboon Irani.

The markets would see "explosive highs" in the later part of the year, with positive election results, U.S. rate cuts and a good monsoon, Irani said.

Global market cues are mixed ahead of the Fed's meeting and U.S. 10-year yields were marginally down, Nair said. "An immediate rate cut seems improbable, but indications about the future trajectory could ease volatility."

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