Indian stock markets continue on their yo-yo trajectory. After their 5th day consecutive fall, markets are positive today. The general mood though seems to be of cautious optimism.

As Mayuresh Joshi, VP - Institution, Angel Broking, told The Quint: “The Indian Markets have probably very few triggers to take the markets higher and carry out a sustained rally. For a structural re-rating to occur on the Indian markets, corporate earnings needs to show a improving trend and it does not seem so at least over the next few quarters -though a few earnings surprises for individual stocks are not ruled out.

Foreign institutions who have contributed significantly to the recent rally continue to be convinced by the India growth story. As per a poll conducted by CLSA among 80 money manager in the US the mood seems to be that Indian markets are reaching a short-term peak which may lead to some degree of consolidation soon.

The structural story remains compelling for long-term investors, but the risk of a near-term pullback is rising.
– CLSA

Technical analysts who had flagged off the correction trend when the 200 DMA dropped, at the start of the week now say that a further drop may be on the cards.

Ashwini Gujaral speaking to The Economic Times said:

”Consensus seems to be building up on no rate cuts and subdued earnings. Therefore, in the next 10 days, Nifty should bottom out somewhere around 8,100-8,200.”

While The Quint will not hazard a bet on where stock indices – which are notoriously volatile and unpredictable - will stabilize, the consensus seems to be a correction of anywhere in the 3-5% band.

Pramod Gubbi, Director-Institutional Sales, Ambit Capital told CNBC-TV18 that the market is running out of positive catalysts and there are more of downside risks over the next couple of quarters.

However, he does not see the Nifty falling below 8200 in the event of a correction, though he warns that individual stocks may fall sharply.

(Written by Abir Pal & Sanjit Oberai)