How to approach the current market? Analysts share their views


Indian markets ended lower today as investors turned cautious after a rally by the benchmark indexes over the past few sessions. The NSE Nifty 50 index fell 0.8% at 18,266.60, dragged down by metal and energy stocks while Sensex dropped about 450 points to 61,259.96. The Nifty and the Sensex have risen more than 3% and 4%, respectively, in the past week. Analysts attributed the selling to sort of profit-booking and stretched valuations in some pockets. 

The tepid start to the earnings season has led to profit taking and global cues have also not been very encouraging, said Ajit Mishra, VP – Research, Religare Broking Ltd.  The broader markets also witnessed heightened selling pressure and both midcap and smallcap lost nearly 2% each.

“Going ahead, we expect choppiness to continue due to the weekly expiry and the scheduled earnings of some of the index majors so it’s prudent to restrict leveraged positions for the time being and let the markets stabilize,” he said. 

Santosh Meena, Head of Research, Swastika Investmart, said “if we talk about the market then there are some signs of distribution but we have to wait for 1-2 more trading sessions to get clarity about whether it is just a pullback or the market has made a near-term top for a meaningful correction.” 

“Nifty has a major support area of 18000-17950; below this, we can expect any meaningful correction in the market. Nifty Midcap index is trading near the sacrosanct level of 20-DMA because it respected its 20-DMA after the pain of August month and if it slips below this level then we can see more pain in the broader market,” he added. 

Investors, said Mr Meena, need to “very selective in the broader market because the way will not be so easy going forward while some of the quality stocks may continue to outperform. Investors are advised to stick with the quality with a little longer-term view.”

“The valuations are stretched which may lead to some serious profit booking in some midcap and smallcap stocks and we are seeing selling my DIIs in the last few days,” he added.

“We are in a strong bull run market where many stocks are trading at an all-time high but investors are advised to not get trapped into stocks where there is a quality concern while the current rally should be taken as a buying opportunity. It is difficult to time the market and I believe the bull run may continue for the next 2-3 years therefore long-term investors should remain invested while short-term traders can take some profit from the table after a big rally in many counters,” he said. 

Titan was the top loser in the Sensex pack, shedding around 3 per cent, followed by HUL, NTPC, Bajaj Finserv, L&T and PowerGrid. On the other hand, Bharti Airtel, SBI, IndusInd Bank, Bajaj Finance and Axis Bank were among the gainers.

Chemical producer Navin Fluorine slumped 9.3% and agriculture input maker Rallis India fell 7.1%, as both companies posted a quarterly profit drop.

According to Rahul Sharma, Co-Founder, Equity99, Nifty on daily charts has shown weakness from last two days which has majorly come from profit booking in the overvalued stocks and sector. “Nifty at current levels of closing has strong & immediate support at 18200 levels if gets breached then next support is placed at 18100-18050 levels. Similarly, strong resistance is placed at 18450 crossovers of which can take Nifty to 18550-18600 from where the selling pressure the quite visible,” he said. 

Vinod Nair, Head of Research at Geojit Financial Services, said: “The ongoing market correction is not an overreaction and can sustain in the near-term due to high valuations. However, in the future Indian corporates will benefit from the reforms and China plus one strategy which happened during 2020-21. Alongside, the long-term economy & market trend is intact due to further re-opening of the economy, low-interest cycle and fiscal & private spending. This correction will give leeway for value-buying, defensives and upcoming stocks & sectors that evolved from this new demand.”

Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities, said momentum support for Nifty is seen at 18025. “Suggest buying with the same as support of closing basis. Breach of 18025 is expected to further invite selling pressure. IT and Cement stocks remain are in momentum buying range while the midcap space is showing early signs of weakness on a broader level,” he said. 

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