Laurence Balanco of CLSA, on Tuesday, said that Nifty will see consolidation between 17,400 and 18,500. He believes that the Indian equity market is likely to see a time-based correction over the next 2-3 months. Balanco also mentioned that for any investor looking for a new entry point, banks are the best bet in the current market scenario. He also mentioned that pharma is expected to remain rangebound.
In an interview with CNBC-TV18, he said, “We think, into year-end, there is a potential that we now need to continue this consolidation pattern, basically between 17,400 and around 18,500; we digest those gains with a bit of sector rotation for the longer-term trend to resume.”
According to him, the Indian equity market is likely to see a time-based correction over the next 2-3 months. “All the evidence currently suggests that we have got a time-based correction of another 2-3 months of this sideways ranging price action. So the fact that we see more time-based and ranging action, suggests that at the sector level, you need to be a bit more active rotating across other themes,” Balanco said.
On sectors, he said, “The Nifty Bank Index, is at an attractive entry point to add Indian banks. On the other side of that, IT like the broader Nifty has now gone into a stalling pattern, and more of a trading range; we think this is an opportunity to reduce and take some profits, because we don't see a sustained breakout and continuation of the longer-term uptrend.”
“One of the weaker sectors has been pharmaceuticals, which peaked much earlier than any other sector, and again is rangebound. So if you are looking at a new entry point, it's definitely the banks because of the short-term correction and on the other side of that is the rebound in IT and possibly consumer goods,” said Balanco.
For the entire interview, watch the video