'Retail investors are waiting for correction'

The benchmark Sensex scaled yet another milestone yesterday while moving past the 11,000-point mark and closing at 10,905.20.

Business Standard spoke to major regional players to know about their expectations from the market. The consensus among the players is that, long- and medium-term prospects are still attractive but advised retail investors to be cautious in the short term.

Talking about the overall market scenario, H S Sidhu, executive director, Ludhiana Stock Exchange, said, "Emerging markets are seen by many players as a good hedge against the US risk, and India is part of a larger story. For the long term, the market seems to be positive. But we are hoping for the correction in the near future. The 1000-point rally in the sensex from the 10,000-point level to the 11,000 mark materialised in just 29 trading sessions. Investors in the region are enthusiastic, but they are looking for correction as an opportunity to buy."

However, V Kumar of Vikson Finance and Investments, Chandigarh, said, "More important is the question about where the stock prices are headed in the short-run. The market is touching new peaks every other day. The huge collection by the mutual funds and sustained buying from the FIIs is fuelling the market growth."

But Kumar advised caution on account of sharp rise in the sensex over the past year and expected a high-level of volatility and profit-booking at current levels.

"The story is not good for the retail investors as they are left with no choice to buy. Most of the investors have invested in mid caps which have not given much return since September 2005. The only option left is to enter through mutual funds as they do not have the capacity to buy stocks like Siemens, ABB, Infosys etc. Retail investors are waiting for the correction to be able to buy," he said. "The market sentiments are also likely to have gained support from decline in the global crude oil prices," he said.

However, Gurmeet Singh Chawla of Master Trust said, "Current valuations are close to historical average valuations. So, as long as there is earnings growth, stocks should take care of themselves. This is a no-sell market with strong fundamentals, sustained domestic buying and retail appetite in equities keeping stocks buoyant."

As for the retail investors, they should stay invested about 80 per cent of their portfolio in A segment scrips or good mid cap stocks." However, the Sensex ended with 35.91 points loss at 10,905.20 and Nifty ended at 3262.30, netting a minor loss of 3.35 points. In late afternoon trade, the Nifty dropped down to a low of 3247.25.