Market correction may be over soon, time to buy again; bank stocks, PSUs expected to outperform

By: |
November 03, 2021 10:51 AM

Domestic market’s correction may soon be over and Nifty 50 index could once again challenge life-time highs at 18,600.

Nifty 50So far, the benchmark 50-stock Nifty has corrected 6% from its all-time high of 18,600. (Image: REUTERS)

Domestic market’s correction may soon be over and Nifty 50 index could once again challenge life-time highs at 18,600, said domestic brokerage and research firm ICICI Direct. The brokerage firm believes the structural bull-run of domestic markets is intact and it is now time for investors to start buying again. Since May 2020, on three occasions Nifty has clocked new highs after undergoing average 9% correction. “We expect Nifty to maintain the rhythm of not correcting for more than 9% observed since May 2020,” ICICI direct said in a report. So far, the benchmark 50-stock Nifty has corrected 6% from its all-time high of 18,600. 

Nifty charting its way towards 18600?

Analysts at ICICI Direct believe Nifty will arrest any downfall in the current corrective phase around 17100-16900 and form a higher base. “In a secular bull market, secondary correction is a common phenomenon. Thereby, we advise to start accumulating quality stocks at current juncture and further dip should be used as buying opportunity to ride next leg of up move towards 18600 by December 2021,” they added. 

Although, ICICI Direct is advising investors to accumulate quality stocks, the brokerage firm is not ruling out another 2-3% correct from current levels. However, any such correction will only be seen as an incremental buying opportunity, they said.

Bank Nifty to outperform

Bank Nifty registered a breakout in October and touched 40,000 mark. ICICI Direct said that the index is in the process of joining the major highs of January 2020 at 32,502 and February 2021 of 37,708 signaling acceleration of up move. “Going ahead, we expect the Bank Nifty to continue its outperformance over the benchmark indices. This structural improvement makes us confident of revising our target upward at 44,600 by December end as it is the measuring implication of the last seven months range breakout,” they added.

Sectors to watch

In terms of sectors that are likely to outperform in the coming months, ICICI Direct is betting on bank stocks. “Bank Index is currently placed at the out-performer quadrant with improvement in both relative and movement term,” ICICI Direct said. 

Further, PSU stocks are expected to continue their positive momentum, continuing its up-move. ICICI Direct is also bullish on Auto stocks and Metal stocks saying the current correction paves the way for a favorable risk reward set up in these sectors. 

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