The Hindu Business Line : Book partial profits and sit on cash, say brokers

WITH the Sensex closing above the 8,000-mark, stockbrokers have advised investors to book partial profits and sit on cash. Officials at several top broking firm said they are advising traders to sit on 30 per cent cash and enter the market at lower levels.

They are also advising their clients to move out of small-cap and penny stocks. For those investors who don't want to sit on cash, brokers advised them to enter large-cap stocks, as the fall in them would not be very sharp.

"We are telling traders not to be very aggressive in the short-term and advising them to sit on 30 per cent cash," said Mr Rahul Rege, Head of Sales at Sharekhan, a retail stock broking firm. He said there is no major concern in the market, but a fall of even 500 points from these levels could wipe out the profits of traders.

According to Mr Ambarish Baliga, Vice-President, Karvy Stock Broking: "Investors should exit small-cap stocks and penny stocks, as the fall in them could be sharp, and hold on to cash."But most of the brokers don't see any major trouble for the investors if they keep churning their portfolios.

"In this market, investors should exit from stock where they have made good profits and enter stocks where there is value," said Mr V.K. Sharma, Head of Research, Anagram Stock Broking.

Mr Rege said outlook for the market still remains optimistic as Sensex is trading at price-earning ratio of 13 based on 2006-07 financial year earnings. "Investments should be stock specific and mainly into large-cap stocks," he added.

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