Markets likely to be volatile in Nov: analysts

After a below par performance in the last two weeks, analysts are predicting another month of volatility for the Indian bourses, despite their firm belief in its long-term potential.

The Nifty may see a maximum of 5 per cent downslide, Angel Broking's Managing Director Dinesh Thacker said.

"Next week it may be volatile, but sure, it will consolidate in the coming months. Nifty may not go below 4,600 and the upside volatility will be up to 5,000 points," Thacker told PTI here.

A downward trend on the bourses was visible only "due to profit-booking at lower levels," Thacker said, adding the "market fundamentals are good."

Religare Equities' President Amitabh Chowdhary opined that movement in the Nifty in November would likely be in the range of 4,500-5,000 and that of the Sensex between 15,800 at the lower level and 17,000 on the upper.

"The dollar is weak now. But if it regains power, we may see a higher outflow from the emerging markets," he said.

Despite the selling-off of future positions for profit-booking on declaration of Q2 FY10 results, open interests have not come down, Kejriwal Research & Investment Services Director Arun Kejriwal said.

"The open interest has not come down as compared to the open interest in the beginning of October. Due to this, the markets may again remain weak," he said.

Telecom sector took a beating in the last two weeks, Kejriwal said. "Telecom is one sector that was affected badly in the last two weeks. If there is a recovery in telecom, the market will also recover," he said.

According to him, the telecom sector's growth story remains intact and it was only an over-reaction to the pay-per-second regulation and lowering of tariffs by players that led to the fall in the sector.

Angel Broking's Thacker described the present time as "a cherry-picking time for the investor. Risk reward is in favour of the investor now. People should use this opportunity to buy good quality stocks," he said.

A lot of value buying was coming in and foreign institutional investors (FIIs) have invested close to Rs 10,000 crore last month, he said, terming the phenomenon "as a good sign".

Analysts are also upbeat on the banking sector citing reasons such as no sharp rise in NPAs and the fact that public sector banks' exposure to commercial realty, considered risky in present circumstances, are limited.

"The banking sector has also put in a good performance in Q2," they said.

On realty, analysts said though the sector held healthy long-term prospects, in the short-term the retail investor would do well to avoid investing in realty. "For the present, it would be better for the retail investor to avoid investing in realty," Thacker said.