According to the market experts, the aggressive rate hikes by the US Federal Reserve and the Reserve Bank of India (RBI) to curb inflation have induced fear of recession and dented the equities.
The increase in US rates also raises a major possibility that apart from the equity market, other markets like debt and bond markets may also see some FIIs outflow anytime soon in India, said Ravi Singh, Vice President & Head of Research, ShareIndia.
“In this momentum, Nifty may continue the sell-off and touch the levels of 14,800 in coming trading days,” he added. “Investors must wait for entering any fresh positions and watch for the sentiments to turn around.”
Geopolitical tensions, global correction, elevated commodity prices, disrupted supply chains, outflow of FIIs, high inflation and a weaker rupee are among the key reasons that have led to the sharp wealth erosion in the markets lately.
According to Singh, both the indices may show some recovery around their first supports. “However, it would not be sustainable,” he cautioned.
Nifty50’s support levels are 15,100 and then 14,800, whereas 15,600 and 15,800 will act as the resistance levels. On the other hand, 32,200 and 31,700 are the support zones for the Nifty Bank, with resistance at 33,450 and 34.200, Singh said.
Index heavyweights, including metal, IT and financials, have remained weak the most. Most sectoral indices have taken a sharp downward route, hitting their lowest levels in the last year.
“The soaring inflation numbers due to Ukraine Russia war led supply disruptions are weighing on the metal prices affecting the operating margins and profit growth, putting the metal counters under pressure, said ShareIndia’s Research head.
“IT stocks are witnessing selling pressure as the margins have declined on account of supply-side pressures,” he added. “The combination, higher inflation, higher rates and FII selling have pushed the banking sector to its worst performance.”
However, he is suggesting a few sectors to hunt value at the current juncture. He said that one can look at FMCG, IT and gas sectors with a long-term investment view.
, , , , , , Bharat Electronics, IEX, and are at attractive levels to go long.
He also suggested short
, (Naukri), , and in the current market gloom.
The benchmark indices are not showing any signs of recovery soon and any trend rebound is not sustainable, suggest the market experts. Investors should follow the wait-and-watch strategy in this scenario.
Investors can deploy 40 per cent of their investment at the current levels, whereas the remaining 60 per cent near 14,800 levels. “Existing investors may wait for lower levels to average their positions,” Singh from ShareIndia suggested.
Market participants suggest that long-term investors should stick with robust fundamentals and not worry about short-term volatility.
Among the second rung counters, Singh sees a good opportunity for investors to make money. “Adani Power,
, Ambuja Cement, IEX, MCX and BSE are some stocks for good returns.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)