Portfolio managers are awaiting a correction to re-enter cyclicals. Some have taken shelter under open-end debt funds waiting for the next entry point into cyclicals.

A part of investments have also moved to non-index stocks from sectors like tyres and auto-ancillaries. However, the portfolio managers have been quick to book profits in frontline stocks from sectors like steel, aluminium, cement and heavy engineering.

According to a section of portfolio managers, a fresh round of correction is expected in the markets, which will signalan entry into frontline cyclicals again. ``A major intermediate correction is in the offing and the market is struggling to sustain the previous major tops. The risk-reward ratio does not favour taking up any fresh long positions at these levels. At current levels, one should be on the sidelines and wait for strong confirmatory signals of resuming uptrend. The signs of an economic revival are still elusive,'' added Ajit Sanghvi at Malini Sanghvi Securities.

``It has been an extremely dull week with markets in the hands of operators. While there has been profit booking in key cyclical counters, the market has managed to close higher this week on account of the spurt in HLL. But the indices are expected to drift lower once HLL announces results. The bourses are likely to see a correction of 200-250 points from current levels in the coming week, which will give a chance to re-enter cyclical stocks,'' said a portfolio manager with a leading brokerage house.

``We have sold stocks like Crompton, GIPCL, Nalco,Bhel, Reliance and L&T while making a partial exit from Colgate, Zee and Dabur. We will be comfortable if the bourses lose another 200 points, and once cyclicals are down 10-15 per cent, we will again buy into these stocks,'' added the head of a local brokerage. The short-term debt plans from mutual funds have been the idle place for short-term parking of realised profits. ``We are 30 per cent in cash and have parked the money in a short-term plan. The advantage is that while the money will continue to earn 8.5-9 per cent, it will be made available the moment we spot a buying opportunity,'' said a portfolio manager.

The market participants say the quarter one earnings of some of the leading companies have been below market expectations. ``The euphoria was there but results have been a dampener. The market saw too much into revival signals with the results likely to show improvement only towards the third quarter,'' said an analyst.

``During the past week, portfolio managers have been scouting for valueinvestments in sectors like pharma, FMCG and IT. The shift from cylicals to these sectors has been apparent but some portfolio managers have used cyclicals for trading profits,'' said a dealer with a local brokerage.

``Despite our portfolio underperforming, we have stuck to the evergreen stocks of FMCG, pharma and software. We did not go whole hog into cyclicals but kept our exposure only to scrips like Telco, Tisco and Hindalco.

However, there have been trading opportunities in cylical stocks despite the lull. The market has read things wrong. While topline growth has been good in Q1, bottomline growth will come in Q2 because of teh lag-effect,'' said ketan Desai, portfolio manager at Asit C Mehta Invest Intermediaries. ``We have been switching our portfolio from one sector to another, booking profits at the end of the day,'' added another portfolio manager with a leading brokerage.

However, there are portfolio managers who have kept their portfolio turnover at bare minimum despite the shiftingbusiness being in vogue. ``We select a stock with an upside potential and with a long-term aspect. We do not believe in shifitng portfolio for the short-term,'' said Deven R Choksey at Kisan Ratilal Choksey.