Market expert Jai Bala of Cashthechaos.com on Friday said the risk-reward is in favour of SpiceJet than Indigo.
He said the aviation sector is breaking out and each week you are seeing new sectors break out, "A couple of months back, I spoke, about the transportation and logistics sectors, along with the PSU sector, they have been doing pretty well and now a fresh record has come from the aviation space.
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According to Bala, the momentum in the Indian markets is overwhelming everything else. So be with the trend, be with a trend, "This time, the pullback might get a little bit sharper and if it is led by FMCG names, then that will signal us that this is the penultimate leg of the move that we have seen. The next leg would be the last leg of the move before we see a large correction setting. But this is not the time to be worried about it."
Aditya Narain, head of research, institutional equities, Edelweiss Securities, said the big caution is the level of outperformance that India has shown, whether it is on a weekly basis or a monthly basis or on a YTD basis, the risk just is very predominantly a market outperformance risk.
"The challenge at this point in time is the level of outperformance that India has shown," he said, adding that it will just make you more vulnerable to what happened in the last couple of hours or for a more extended period where valuations are more stretched, makes you just more vulnerable to any bad news, any event, or any disappointment that comes through.
When markets have outperformed so much and at our at such a level, it requires a little bit of a trigger, and you will have plenty of people saying,’ I told you so’ which then tends to become a more vicious cycle, Narain said.
He said, "Typically, the higher you go, the riskier it gets. So that is a very simplistic adage. The fact that you had a fair amount of domestic capital raising, in mutual funds, which have been pretty broad-based, does suggest that at some level, there is just a little bit of a reallocation that is happening between fixed income, between the sense that that equities can return much more than a lot of other asset classes. So, I wouldn't get too much into the timing of the market. But the reality is, the higher it gets, the riskier it gets."
For the entire discussion, watch the accompanying video
First Published: Sept 17, 2021 7:11 PM IST
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