Markets likely to be volatile amid profit booking this week

Real estate, infrastructure, banking sectors may perform well.

After last week’s rally, which saw the stock market setting aside apprehensions of corrections and gaining 477 points, experts said that this week would be volatile amid profit booking as settlement was approaching. According to them, the stock market indices may continue their rally but will not sustain it.

The better than expected advance tax numbers stoked bullish sentiments in the markets and observers said that it could be an indication of good numbers for the quarter ending September.

CNX Nifty, which touched the 5,000-mark but could not sustain above it, gained 146.50 points or 3.03 per cent on a weekly basis to close at 4,976.05 last Friday against the previous week’s close of 4,829.55. Similarly, Bombay Stock Exchange Sensitive Index, or Sensex, rallied 477 points to close the week at 16,741.30, up 2.93 per cent.

Amitabh Chakraborty, head (equity), Religare Securities, said, “Nifty is most likely to go up to 5,000-5,200 range but will settle around 4,900-5,000. The week will be marked with volatility and profit booking.”

Brokers maintained that Sensex, on the back of momentum and high liquidity may rally up to 17,000 but, they added, correction was awaited in an over-bought situation.

“Momentum is strong and liquidity too is good which has brought back the confidence. However, there is a likely case for corrections. Market will watch out for the September quarter numbers,” said Jagannadham Thunuguntla, equity head at SMC Capitals.

Fund managers opined that upside movement for the market this week is limited. They said that amid profit booking, markets may see consolidation.

The sectors, experts are bullish on include banking, real estate, construction and telecom.However, on the fast moving consumer goods (FMCG), auto, commodities and IT, in particular, brokers are underweight.

“Banking stocks still have steam and can be pulled up. However, valuations of IT stocks are currently stretched and this space is not a comfortable avenue for the time being to invest in,” said a broker.

Commodities’ prices are not hardening, said a fund manager. “We are underweight on commodities. Money will flow out from the IT and commodities space to sectors like infrastructure, real estate,” he further added.

According to Chakraborty, in October market could see a correction and may come down to 4,750 levels.