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Markets headed for a major correction
June 01, 2006
Gaurang Shah of Geojit Financial Services believes that the fall is a global scenario with Asian markets and the LME prices on the metal exchange down.
Shah feels that the market breadth indicates that it is headed for a bit of a major correction going forward.
Shah advises intra-day or short-term traders to stay away from such a market, as stop losses at whatever levels would get recurred in such a falling market.
Shah feels that one should invest in a healthy mix of frontliners from pharma and banking sectors.
Excerpts from CNBC - TV18's exclusive interview with Gaurang Shah:
What do you make of this downfall and how intense do you see it going?
We saw a 1,100 point knock and now this morning we have seen around 570 points knock. Definitely, it's a global scenario, the Asian markets are down, and the LME prices on the metal exchange are down. It looks quite weak, we did see the nervousness sinking yesterday and the kind of volumes that were happening.
The market breadth indicates that we are headed for a bit of a major correction going forward. My advice to my clients is that for whatever you have got invested, whatever small percentage of your investible amount, stay invested. If you have a longer term horizon, possibly buy on dips.
If you are an intraday trader or a short term trader, it is better to stay away from such a market because all kinds of stop losses at whatever levels would get recurred in this kind of a falling market. Possibly, the margin calls will trigger again because people would have thought that since the markets have stabilised a little bit and it is safe to venture into the market.
Post afternoon, we will wait to see if there is some kind of a respite coming in the market, then that would be a breather but as of now it looks bad.
Which are the stocks that you would pick up in this market?
One would look at sectoral picks like automobile and cement. Though in the metals pack, people are a little negative about it, one can possibly look at it on lower levels.
I would make a mix of selective pharma stocks and maybe some bit of banking and not really advise people to go 100 per cent on their investments. I would advise people to invest around 15-20% in the frontline stocks of the sectors that I have suggested. But if you are a long term trader, then you can take a view on this.
Are there any midcaps that are looking attractive at these levels?
I have always traded in front liners and midcaps. I have a few selective stocks like Pantaloon and Titan and maybe TVS Motors on a lower level could possibly be a better bet. More than that, one has to be careful on the midcaps.
Any disclosuresNo investments at all in the equity market. I have advised my clients for the stocks that I have mentioned.
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