Bears maintained a strong hold on Dalal Street on Thursday as taking the recent fall to the third straight day, benchmark indices Sensex and Nifty tumbled further amid inflation concerns and hawkish Fed. The BSE Sensex gave up the psychological level of 60,000 and plunged over 900 points, while Nifty50 fell below 17,800 support level. Amid steep correction, analysts advised investors to stick to the safety of high quality large-caps in performing sectors.
“Indian market is following global cues which is slightly weak. Also, the market is trying to be cautious ahead of the major event of budget,” according to Gaurav Garg, Head of Research at CapitalVia Global Research. “For long term investors, every such opportunity is a good time to add quality stocks to the portfolio. Also, it is prudent to note that, timing the market is not always possible, hence, one should take the SIP route to add quality stocks to the portfolio, however, such opportunities (3-5% correction) should be used to add these stocks (if one has got surplus cash),” Garg said.
Is a market crash coming? Not likely
Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told Financial Express Online: “Markets have seen a rather rapid correction of nearly 600 points in the last three days. This has come after a strong technical pullback of nearly 1800+ points from the lows of 16400. The present technical structure on the charts suggests consolidation; however, there are no signs that point at any major drawdown or a crash. So, I think investors should now start approaching the markets on a highly selective note; all such opportunities should be used at picking up good quality stocks with improving relative strength. This is the time to add good quality stocks.”
Markets volatile in the run-up to Budget 2022
Amarjeet Maurya, AVP Research Analyst, Angel One, told Harshita Tyagi that “Markets will remain under pressure in the near term mainly because of rising inflation in the US and a possibility of interest rate hike by Fed. However, wage growth rate, demand is going up in the US, while unemployment rate is going down which is a positive. Going forward, the inflation, which rose globally due to supply chain issues, will cool off as Omicron cases go down. Overall, near-term prospect in US is positive which will be reflected in India as well.” He added that at the moment, markets are volatile in the run-up to the Budget but strong growth in terms of earnings is expected in the next two years. They are bullish on banking, consumption sector and select stocks in the IT sector and investors are advised to buy on dips.
Market may witnesses recovery from here
Parth Nyati, Founder, Tradingo said, “The Indian equity market is showing weakness for the third day in a row on the back of FIIs’ selling, rising US bond yields, and concerns of inflation. However, this is just a correction that should be taken as a buying opportunity. If we look at the trend of last three years, then the market starts to correct between 15-20th January and then it witnesses post-budget rally. A similar trend is visible for this year as well. However, I believe the market may witnesses recovery from here as we are near critical support levels.”
“Nifty is trading near critical support of 17650 which was the previous breakout level while 17500 is another important support level. On the upside, 18000-18200 is an immediate resistance area; above this, we can expect a move towards an all-time high. The texture of Bank Nifty is strong and it may outperform from here and I believe we can expect strong earnings by banking names,” Nyati added.
Investors should hold their long term bets
Mohit Nigam, Head – PMS, Hem Securities, said: “Some of the factors that led to correction in markets are sharp rise in US bond yields which lead investors to shift their funds to less risky assets, FII selling in previous few sessions, rise in COVID cases and restrictions imposed by state government, and absence of positive surprises from Q3 earnings till now. Definitely, it is a time when investors need to be cautious while initiating fresh positions but at the same time this dip is giving investors ample opportunity to accumulate good quality stocks with strong fundamentals and growth visibility.”
“We believe the Union Budget 2022 would be growth focused via Capex and incentivising productivity & growth through various schemes, which will ultimately bring positive momentum in the market. So investors should hold their long term bets and invest in Indian equity markets with buy on dip approach for medium to long term,” he added.