Market to see more selloff, will turn attractive if Nifty50 slips below 6,800

NEW DELHI: Analysts on Dalal Street expect the current downtrend to take Nifty50 to 6,800 level in the short-term, indicating that the pain may not subside anytime soon.

The domestic equity market wiped off most of its 3.8 per cent gains from the relief rally seen in the last week of January. The BSE Sensex, a gauge of 30 biggest stocks by market cap, has shed 2.4 per cent in the first three days of February.

“It is very difficult to put a number on the index and say okay this is where it will go. The fact of the matter is that the index has now more or less fully priced in current year earnings, which do not leave you with any upside from here,” said Anand Tandon, Independent Analyst.

For minute-by-minute market/stock updates, follow our Twitter handle @ETMarkets

Tandon sees the Nifty50 creating a potential upside only after hitting a level closer to 6,800.

“How much of a fall it will be is anybody’s guess. I would think 6,800 on the Nifty50 would be a level which will give you some potential upside,” he said. “If it were to reach that level, many stocks would have to fall faster, and consequently, you may find at least a bunch of stocks that would be worth buying.

How much more can the market fall? One of the reasons for the broad selloff is the selling pressure from foreign institutional and portfolio investors in January. FIIs were net sellers to the tune of Rs 1,670 crore so far this year.

“FIIs have been continuous sellers, and it looks like even domestic investors are joining the party of selling. Unless this selling stops, there may be some more pain,” said U R Bhat, MD, Dalton Capital Advisors.

Dipan Mehta, member, BSE & NSE said, “This will continue and it is very difficult to see the end of this selling or at what level of the market this particular carnage will end. I think this sort of volatility is something investors will have to live with at least for the next few weeks.”

“We have to see stability in global markets, especially in China and in crude oil prices. Unless we see stability on these two fronts, our market will continue to remain rattled purely on account of negative FII flows,” he said.

For Pankaj Pandey, HoR, ICICIdirect.com, the top picks include Timken India (target price Rs 740), Star Ferro (target price Rs 215), Voltas (target price Rs 384), Bharat Forge (target price Rs 970), Supreme Industries (target price Rs 842) and ITC (target price Rs 387).

Shrikant Chouhan of Kotak Securities picks Balrampur Chini with a target price of Rs 110.”We like Balrampur Chini in the midcap segment. We are of the view that we can take long positions on Balrampur Chini at current levels of Rs 110 with a stop loss at Rs 85 and if there is any decline because of any reason, we should look for adding this stock to the portfolio,” he said.