profit booking: Credit Suisse Wealth sees more profit booking in Indian equities in coming weeks

Mumbai: The Indian equity market could see some further profit booking in the coming weeks, said Jitendra Gohil and Premal Kamdar of Credit Suisse Wealth Management in a note. The wealth management firm said this correction is likely to be very sharp and would not last long.It is advising investors to use this correction as a buying opportunity from a six to nine month perspective. Credit Suisse Wealth continues to prefer cyclicals and midcaps.

The firm said Reserve Bank of India’s recent quantitative easing is likely to keep the government bond yields range-bound despite higher-than-expected supply and elevated inflation. It prefers corporate bonds over treasuries with a preference for 1 to 3-year duration bonds.

India’s benchmark Sensex has fallen over 9% from record highs hit in mid-February. Concerns over rising bond yields and strengthening of the US dollar have somewhat abated but worries over a sharp rise in coronavirus cases and macro slowdown have resurfaced.

India reported 2.95 lakh new cases of coronavirus and over 2,000 deaths on Tuesday. The national case count on Tuesday was nearly three time’s higher than the peak of 98,795 daily infections recorded during the first wave of the pandemic in September 17.

Credit Suisse Wealth believes that the second wave of the pandemic in India and restrictions may lead to some growth worries but corporates are better prepared this time. It does not expect a nationwide strict lockdown to curb the pandemic.

“Instead, policy makers could resort to partial lockdowns, faster vaccine approvals and strengthening of the healthcare infrastructure,” said Credit Suisse Wealth.