Nifty expensive at current levels, be cautious: Analysts

The Nifty continues to hover around the 5,000 market. Analysts are of the view that surges of liquidity are keeping the market buoyant but people should be cautious buying at current levels as valuations were running ahead of fundamentals.


In an interview to CNBC-TV18, Jagdish Malkani, Country Head of Taib India, said one could se a sharp correction anytime though as of now, there were no major signs and the market was being resilient.

“Nobody could have imagined in their wildest dreams the kind of run we have had. The Nifty has breached 5,000 and is still very strong. Even on Friday, Asian markets, China were down 3%, Europe was stumbling and US futures were down but the Nifty was resilient.”


Rajen Shah of Angel Broking said the sheer avalanche of FII money, especially in the cash segment, continues to overwhelm the market. “However, at the back of one’s mind, it is a clear view that things are running ahead of themselves, valuations are pretty rich especially of the top 100 or 200 stocks but who is to argue with the trend? It is a global trend — just a great relief at supposed end of recession — but the jury is still out.”

Shah said the markets were giving an indication of an intermediate peak and added that he would not be very comfortable getting into the market at the current levels.

Reflecting back, Shah pointed out that in October 2008, the markets were at 7,600 and it was around 16,700, an almost 9,000-point rally in a matter of 11 months. “So I think a breather is required and a good correction could really be healthy to the market,” he said. “The call would be book some profits off the table and maybe go out for a winter vacation.”

View on stocks/sectors

With regard to the auto sector, Malkani said in the two-wheeler space, Bajaj Auto was a good company. “It has been whipped in the 100cc segment and the whole motorcycle space by Hero Honda. But this longer-term strategy of exiting the 100cc segment and getting their products out there is going to pay off in spades. Incidentally, their slower or probably less risky way is to play that out through Bajaj Holdings, their holding company which owns 30% of Bajaj Auto.”

Malkani is bullish on the banking space. He feels there is, probably, some upside in the public sector undertakings still, but is apprehensive about the treasuries hit that the banks could take as they maybe forced by the government to reach out to drought-hit aggrieved rural community.

With regard to the private sector banking space, he said there is good value there especially in some of the midcap private sector banks.

While Rajen Shah is bullish on Shrenuj Gems, a small company with a turnover of about Rs 1,500 crore. He said, “I expect this stock to be a multi bagger, and I am looking at a USD 1 billion kind of turnover in the next four years.”

On the Pipavav IPO, Shah said he doesn’t expect any major kind of gains from the stock. He said it is good for long-term but in the short-term he wouldn’t advise getting into this issue.

With regard to commodities, Rajen Shah, said they are more than fairly priced. “My call would be still on soft commodities, that is sugar and tea.” He said he likes sugar and tea stocks even at this point of time and added that McLeod could even move up another 20% from here.