The boom in India

Markets to correct once FII flow ebbs, but still likely to rise to 7500
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According to Anup Bagchi, COO of ICICI Direct, markets would see a correction the moment the FII flows, which is the only source of liquidity, ebbs. He also said that on the downside he is looking out for 6425 and on the upside he is looking at 6674 levels.

Bagchi told CNBC-TV18, "Near term, I am still looking for a correction because it has run too far. There is only one source of liquidity which is the FII. The moment that flow ebbs, there will be a correction. I am personally looking for a correction, which should be a healthy correction."

Bagchi further said that fundamentally and valuation wise, it looks strong. "I would advice to put a trading stop loss. If it turns, one should get out or otherwise one should keep running the positions. If you look at levels, 6425 is one level I am looking out for. If it steps down, may be 6225 and below that 5900. These are the three levels I am looking at. So may be at one of the levels it will stop and then move up. On the top 6674 is an important one and after that it is 6900. So I am hoping that it might correct by 100-150 points and then move off from there."

When asked whether the 7500 levels, which the fund managers are speculating, is warranted or not, he said, "Valuation wise they still look quite attractive. Fundamental optimism not just in the stock market but also the real economy optimism is very high. Growth seems to be very high. Economy is going strong. So valuation wise I don't see that as a very big issue. If you look at 7500, it would go back to valuation one and a half years back. So 7500 is not a very out of the world kind of expectation but some other partcipants must come in the market. Retail has not come in such a big way and neither the domestic money is flowing in."

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When asked whether he would tell his clients to get out of their positions if the Sensex were to correct at 6425, he said, "I won't say to get out of the positions. 6425 is may be 125 points from where it closed yesterday. 6225 is where I would tell them to take a look. At 6425, I would tell them to buy and put a stop loss at 6350 and then run the positions."
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