Markets this week: Should you buy shares on dips or sell on a rally?

With the better part of the earnings season behind us and the US Federal Reserve’s stance on liquidity and interest rates known, trading in stock markets from here could be bumpy for Dalal Street investors in the near term.
 
Last week, the BSE Sensex ended Samvat 2077 at 60,068 levels, while the Nifty50 settled at the 17,917 mark. The exchanges conducted the Muhurat Trading session on Thursday evening to usher in the Samvat.
 
However, red flags are now up on the Street, with analysts advising investors to tread carefully as the markets face multiple headwinds – both from domestic and global factors – which could keep them choppy.
 
Independent market analyst Ambareesh Baliga said:
 

• Markets will be volatile in the near term
• Utilise any bounce-back to partially book profit
• Red flags: High oil prices, Fed tapering, reduced liquidity

 
So which sectors could possibly see a correction? And which ones may present a good buying opportunity? Baliga said:
 

• Use correction to buy: Real Estate, specialty chemicals, pharma
• Correction likely in: Auto, Cement, Metals

 
From a long-term perspective, Motilal Oswal, MD & CEO of Motilal Oswal Financial Services, believes markets have always moved in tandem with earnings growth. And although there would be ups and downs in between, he expects the overall trend of the market to remain positive in Samvat 2078 as well.
 
This week, however, markets will focus on primary market action, the last leg of corporate earnings, and economic data.
 
EVENTS THIS WEEK

• Paytm IPO: Nov 8-10
• Sapphire Foods and Latent View Analytics IPOs: Nov 9-11
• Nykaa Listing: Likely on Nov 11
• CPI inflation: Nov 12
• Earnings: Coal India, Hero MotoCorp, BHEL, MRF, NMDC, Ashok Leyland

 
Three new initial public offerings – those of Paytm, Sapphire Foods and Latent View Analytics – are set to hit the Street this week. Moreover, Nykaa’s shares could also debut on the bourses on November 11.
 
In the secondary market, stock-specific action will remain high, with companies like Coal India, Hero MotoCorp, Ashok Leyland, MRF, and BHEL slated to announce their results this week.
 
On the economic front, retail inflation data for October will be released on November 12.
 
Globally, markets will react to the US Fed’s decision today as the markets open for trade on the first day of Samvat 2078. Oil prices, FII fund activity, and the rupee’s movement will also guide the sentiment this week.