The Nifty has moved 60 percent from the lows of March and so some profit booking is natural, Harsha Upadhyaya, CIO – Equity at Kotak Mutual Fund told CNBC-TV18.
“There has been a sharp performance across many sectors,” he said.
“So to that extent it is only natural that when the valuations have become a little more elevated, there will be some profit booking at various levels. That is what we are witnessing at this point of time,” he said.
Upadhyaya said that foreign fund flows are robust, but domestic institutional flows have turned negative. He added that there have been net redemptions at mutual funds for the last 3 months and hence liquidity alone won’t able to push the market up. The move will be more stock specific in nature, he said.
Upadhyaya said that the festive season demand will be key to determine whether the overall recovery will sustain or not. “If for some reason, either because of another spike in COVID cases or because of pent up demand getting satisfied, etc. then we may have issues in terms of festive demand remaining strong. In that case, there is volatility that we can expect in the market. But otherwise, the momentum is building in terms of economic activity,” he said.
According to Upadhyaya the rural economy is doing well. The number of COVID Cases in tier-II and III are also being contained, he said. “All this points to revival in demand during festive season. If that happens, markets would take it positively,” he said.
Speaking about technicals, Rohit Srivastava, Founder & Strategist of indiacharts.com said that the Nifty could go past 12,020 mark which was seen earlier this week.
Srivastava further added that the focus is on midcaps and once the momentum in midcaps starts, there could be broad-based rally.