Domestic indices BSE Sensex and NSE Sensex saw most of their monthly gains erased as they trade deep in the red today, down 1% – but recouped some of the losses in the afternoon trade. As bears and bulls tussle through the month on Dalal Street, indices have remained volatile over the past few sessions. Experts ask investors to exercise caution and buy on dips in order to make it through the choppy markets.
Nifty: Levels to watch
Most analysts unanimously agree that Nifty’s key support is at the 18,000 level. “Nifty has immediate support at 18,220, if it breaks it then it may slide to its next major support of the 18,133 level where we may see some buying in the market leading to a pullback rally up to around the 18,414 level. Once Nifty breaks & sustains below 18,133, it may achieve its pattern target of the 17,788 level. In between, the level of 17,928 will act as an intermediate support level where some buying is expected,” said Vinit Bolinjkar, Head of Research, Ventura Securities. “Ahead of Christmas and new year holidays in the international market, the market is expected to remain sideways in upcoming trading sessions,” said Naveen Mishra, Senior Research Analyst – Equity Research, CapitalVia Research.
What is the ideal investment strategy right now?
Bet on fundamentally strong stocks
During every correction or period of prolonged volatility, experts always advise caution and ask investors to find value in stocks that have demonstrated strength. “Though the overall sentiments are weak amid global cues, we recommend that investors gradually accumulate stocks which are showing relative strength,” said Vinit Bolinjkar, Ventura Securities.
Buy on dips
“Considering the volatility in the global markets traders should smartly use the dips to accumulate fundamentally strong and low beta stocks,” said Prashanth Tapse – Research Analyst, Sr VP Research, Mehta Equities. “Investors should view declines as a buying opportunity in high-quality stocks that are least impacted by the global crisis because the prognosis for the Indian equity market is optimistic overall,” added Santosh Meena, Head of Research, Swastika Investmart.
Prashanth Tapse, Mehta Equities suggested that investors look towards banks, infrastructure companies and real estate. Naveen Mishra, CapitalVia research agreed with the call on banks, stating, “PSU banks have performed very well in recent times and that can continue the positive movement after some profit booking.” Infrastructure, capital goods, automotive and alternate energy (solar, green hydrogen, ethanol, etc.) are sectors that Vinit Bolinjkar, Ventura Securities is currently bullish on.
Factors that could move the markets
Domestic markets will find directional cues from the RBI monetary policy meeting’s minutes which are expected to be released 21 December. Additionally, the final estimate of the US Gross Domestic Product (GDP), expected to be confirmed at 2.9% will trickle in on 22 December. This data will also be relevant for further cues, said Prashanth Tapse, Mehta Equities.