Taking cue from its Asian peers, the Indian markets have corrected sharply since opening trade today.
At 12:52 pm, the Sensex was down 76.71 points at 9506.74, the Nifty was down 25.35 points at 2884.25.
Experts believe that the markets will drag in a similar way for some time.
Amit Dalal of Amit Nalin Securities says, "The markets have seen a rally which was above expectations, so now it's looking a bit confused. The markets already seem quite discounted and need a new trigger for a new spike upwards. They will drag for some more time and can experience a 2-3 per cent correction."
He adds that, he has a slightly contrarian call on the markets. "I believe when the US market heats up and sudden interest moves over there, then to a large extent whatever gains the emerging markets give, they start looking a little expensive. So I don’t know how far the Dow will go up from here, but it could divert attention of many fund managers for some time. So that could remain one reason why this market will remain lack-lustre for the next few days."
Technical analyst, Deepak Mohoni says, "The main Indices came plummeting down yesterday, led by Reliance, but the midcap Index went up. So the markets are going through an uncertain period right now. The Index is in a narrow range, and will remain in a sideways movement phase, after which it could emerge either way."
Mihir Vora of ABN Amro AMC believes that going ahead, earnings growth will drive markets and stock prices.
He says, "The direction of the market broadly remains the same, we will maybe see a 12–15 per cent gain in the market over the next few years, which essentially means that earnings growth is likely to drive stock prices rather than re-rating of the market as a whole. So obviously, we will have to be more selective. It is going to be that much more difficult to find stocks and sectors to make money in."
Nirmal Jain of India Infoline says, "Markets, fundamentally as well as based on liquidity are bullish but one should not forget that after such a run one should be prepared for the corrective phase of 10-12 per cent anytime. Any event could trigger that, but given that, for the long-term equity investors, markets still look very good."
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