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    Market ripe for correction; expect Nifty in 17,350-18,300 range next week, say experts

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    Market ripe for correction; expect Nifty in 17,350-18,300 range next week, say experts

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    The market tumbled for a second straight week as Nifty and Sensex slipped 2% each to record the biggest falls in eight months. To discuss the week gone by, the earnings, and the outlook going forward, CNBC-TV18 caught up with Harsha Upadhyaya, CIO Equity, Kotak Mutual Fund and Anil Manghnani, Director, Modern Shares & Stock Brokers.

    The market tumbled for a second straight week as Nifty and Sensex slipped 2 percent each to record the biggest falls in eight months. Nifty Bank also lost 2 percent while the midcap index ended the week 3 percent lower. To discuss the week gone by, the earnings, and the outlook going forward, CNBC-TV18 caught up with Harsha Upadhyaya, CIO Equity, Kotak Mutual Fund and Anil Manghnani, Director, Modern Shares & Stock Brokers.
    According to Upadhyaya, the markets have been volatile, while the earnings season has not been that bad. Earnings have been slightly better than expectations. For the companies that have announced results, until now, the expectation was about 23-23.5 percent year-on-year (YoY) growth, and that has come in at about 28 percent YoY growth. So, to that extent, the earnings season has not been so bad at the aggregate numbers level.
    However, what is worrying most of the investors is the input cost pressures seen at the EBITDA level for most corporates. Also, the commentary is that the pressure will continue and it will have an impact in the next quarter as well, he said, adding that overall, at these heightened valuations, there was little room for disappointment.
    “We had not seen a significant correction for many months now. So, the market was ripe for a correction and there is some nervousness building up because of the sharp outperformance that India has witnessed vis-a-vis emerging markets in this calendar year. It is almost 30 percent relative outperformance,” he said.
    According to him, some profit booking seems to be happening and that is leading to this decline in the market.
    According to Manghnani, the Nifty actually played a little bit of catch up to the mid-caps and small-caps. "We saw the first part of selling last week in the broader markets, and that, sort of, triggered the Nifty and Bank Nifty this week," he said.
    Technically, the market has good supports -- there's the 10-week average on the Nifty at about 17,600 and another major support at 17,350. However, the next week being a truncated week due to Diwali, it is unlikely that this range would break easily.
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    “The market will take some support at 17,600 to 17,350. I do get the sense that without having any confirmation that the top is in play that the pullbacks are not going back to the highs. We are seeing lower tops, at least on the short-term charts. So, even on the upside, I would be surprised if we take out 18,200-18,300 easily. The market needs to spend some time in a range because it has been a one-way over the last 12-18 months, and that it is just the first sign of correction,” said Manghnani.
    So, whether it is going to be a timewise correction or more a price-wise correction – for that we will have to wait a couple of weeks – I don't expect too much action next week, but post-Diwali we might get a clearer picture, he said.
    For the upcoming week, the Nifty should be in the range of 17,350 to 18,300 although it is a broad range, he said.
    Talking about the overall PSU space, Upadhyaya said it cannot be looked at as a homogeneous basket. There are financials, there are non-financials, even within non-financials, the sectors are very different and the drivers are very different. So, each of those have to be fundamentally analysed from a bottom-up perspective and then you need to take a call on whether to invest or not.
    "I don't think having common ownership can be a reason for investing or not investing in stocks. That is how we evaluate when we look at some of these opportunities in our portfolios," said Upadhyaya.
    For the full discussion, watch the video
    Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
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