The day we touched 50,000, markets actually peaked out. Between yesterday and today we are down a good 2.5%. Quite an anticlimax!
We are seeing a healthy correction before the Budget and healthy profit booking in most of the sectors before an expiry week. In the last two days’ trade, the clear seller is banking. Financials will take a halt and that was the sector which performed better in December second half and the January first half. These were the stocks which rallied quite a bit.
We are seeing some profit booking and I feel there could be some more selloff or maybe profit booking in financials. The real winners were pharma and IT which started the rally. They continue to hold on and they will do well, followed by metals where we saw some profit booking. But one should consider buy on dips in the metals sector as the undertone is getting quite strong.
Why do you think financials will fall? If the underlying premise of the market rally is that the economy is coming back, corporates have started expanding and the economy capex is about to start, then ideally corporate banks and financials should do well.
You are right but this is a near term view where we are seeing a profit booking and on back of it, the stocks had rallied because of economic revival and financials and capex driving back. I feel that near term the stocks had run up quite sharply and some profit booking was on the cards. Before Budget and expiry, people wanted to be a little bit lighter and that is the reason we are seeing some profit booking.
What is the market expecting from the Budget prima facie ?
The market has run up quote fast in the last two months. So before Budget, people would like to book some profits and that is the only reason we are seeing some profit booking on the table, nothing else. At lower levels, if there is another 2-3% correction from here, then a lot of stocks would look attractive again in a stock-specific approach. One can always look at it.
The one sector which is holding out today is auto and auto ancillaries across all categories. What is leading to this renewed vigour?
One thing was very clear in this quarterly performance which has started is one thing the demand led by festive season and the pent up demand which was driving since the last three, four months. These are the two reasons why all the entire auto numbers have been quite good in the last three months.
Bajaj Auto’s numbers were quite good and that is also a reason why the auto sector held on today and should hold on for some time. Auto ancillaries are doing well on the back of auto stocks doing well. That is the reason we are seeing the entire auto pack in limelight.