Nifty all set to test 8,000 on crude, likely weak Q4 earnings

In a chat with ET Now, market expert Ajay Bagga shares his view on what factors may lead to further correction in the market.
ET Now: Do you think Nift is on its way to 8200-8300-odd levels?

Ajay Bagga: I think Nifty is going to test 8,000. The fall seen on Thursday was quite harsh. I am not expecting a sharper fall than this. It will be a painfully slow market in the next one month; 'sideways' should be an appropriate word here. Earnings are going to be bad, which too will have some impact. Weak earnings should have been baked in, but I do not think that it is yet fully baked. Things are not looking too good. I think Nifty is going to test 8,000.



ET Now: The fair value for the market seems to be eroding now — the macro premium that the market was enjoying under with the favourable crude scenario seems to be over. We have witnessed unseasonal rains hitting agri-output and, thus, there could be inflationary concerns as well. What is your view?

Ajay Bagga: Oil prices surged more due to geopolitical tension. One must note that the crude output by Saudi Arabia has not been impacted much.
Having said that, it is Iran versus the Arabs. That is how you have to look at Yemen.

If it becomes a bigger issue, then it will certainly hurt the sentiment. The US is exiting the whole region. You needed both Russia and the US to be present there and maintaining peace in the volatile region which in fact is key oil exporter.

You are seeing its impact on gold prices. This is not good for India. The rise in oil prices would have a concomitant impact. The RBI may not cut policy rate on April 7 as hike in crude prices may hurt inflation numbers. This is bad news for the market. Add liquidity concerns to the current scenario, things do not look good.

ET Now: What do you advice investors to do at this point?

Ajay Bagga: What I am expecting is that hopefully there would some kind of a earnings pick up in the second half; investors sitting on cash may continue to sit on cash and wait for better deals. Investors who are already invested in should not have any leverage, any margin plays in this kind of market. You can only take out shorts in a very small trading windows. Hence, you must keep very tight stop losses.