Marathon Trends-PMS says massive sell-off in Nifty unlikely, overweight on banks, financials

Global markets are witnessing a bull run, but Indian markets have underperformed due to various domestic issues such as liquidity crisis of non-banking financial crisis, said Atul Suri, chief executive officer of Marathon Trends-PMS. Forty-seven out of the 50 markets they track are positive in dollar terms and the average upside has been around 12-14 percent, he said in an interview with CNBC-TV18.

Indian markets are up only 6-7 percent in dollar-denominated terms, he said. Nifty failed to push above 12,000 levels and 11,650 was the level around elections lows and so that is a focus point for short-term traders, he said.

"There is a gap for Nifty between 11400 and 11600 and so in case the pressure continues, we could see these levels but do not see a massive sell-off in the Nifty," said Suri.

"The sentiment is much worse than actually, it is going to pan out in the markets."

“We can have another 2-3 percent fall in the market to 11 400 levels but the risk-reward ratio is better for the upside," said Suri.

"As corporate numbers start coming in and if global markets don’t have major sell-off, you will start seeing certain positives playing out,” he added.

The Nifty Bank, according to him, is a lead indicator to the market by virtue of its weightage in the Nifty, and for the market to have a massive correction the Nifty Bank would have to collapse, said Suri, adding that banking and financials are overweight.

”My personal target for the Nifty is around 13,600,” he said, adding that financials will continue to be the leaders just because of their weightage on the Index but there are some green shoots in areas like infra, quality real estate, he said.

According to him, the market is punishing stocks with quality issues and there is the preservation of capital in blue-chip large-cap stocks. However, going forward it would be back to earnings, back to global markets and that is where the market will get back into sensible times, he said.

Sector-specific, he said the house has around 5 percent allocation to pharma but would like to be in some of the clear spaces and not into messy stocks. Similarly, in autos too one would like to bet on a clear winner because preservation of capital is important, said Suri.