Caution for retail investors

Mumbai: On Monday, the market opened with 512 points gap up and registered fresh all time high of 61,963. But after a strong opening entire day the index was hovered in the range of 61,650-61950 points. Among sectors, the strong buying interest was seen in Metal and PSU Banks stocks while selective pharma stocks witnessed technical selloff.

Technically, after a stellar rally on daily charts, the index has formed Doji Star kind of formation which suggest temporary overbought situation.

However, the short-term trend is still in to the upside. "We are of the view that, due to overbought formation the bulls may take a caution stance near 62,000-62,400 resistance level. For the trend following trader, 61,000 would be the trend decider level," says Shrikant Chauhan, head of equity research (Retail), Kotak Securities.

Above the same uptrend formation will continue up to 62,000-62,300 points. On the flip side, below 61,000 technical sell off up to 60,700-60,500 is not ruled out. The intraday texture is overbought. Hence, level-based trading would be the ideal strategy for the day traders, he added.

Experts have warned that the retail investors should be more careful about the market. Deven Choksey, MD of KR Choksey firm said, "it is typically a Bull market where every small news is being given extra amount of trust. But, the second half of the current fiscal is going to be costlier for most of the listed companies. The reason is that the commodity prices are going northwards and the high cost will come in the books of the companies affecting their profit margin in the second half."

Hence, I would, he said, advise investors to be a little bit more careful about it and they should not buy into every rally. Rather, they should buy into the fundamentals of the business.