Amit Trivedi, CMT, Technical Analyst – Institutional Equities,
YES Securities, on the price movement and the road ahead. He is fairly bullish on larger lenders and select infra plays.
Last week was very volatile for Indian markets where Sensex and Nifty50 both hit fresh 52-week lows, respectively. What led to the price action?
Nifty had to endure relentless selling in Thursday’s trade and last week, all sectoral indices ended in red. Midcap and smallcap stocks fell like a pack of cards. Lack of stability, poor market breadth, higher India VIX levels and sustained move below key moving averages usually trigger a sell-off of this intensity.
We hit a 52-week low last week – what is next for Indian markets? Should one turn cautions, reduce long positions, or buy the dip? What does history suggest?
A 5.61 per cent correction in a week’s time is rare. Historically, over the past decade, whenever Nifty sustained a weekly fall of more than 5.6 per cent, the 20 day-return post the fall was invariably positive (with the exception of March 2020).
This type of pessimism zone usually provides a better risk-to-reward ratio set-up in sectors/stocks that are likely to out-perform the benchmark index.
Which are the important levels which one should watch out for in the coming week for Nifty and Nifty Bank?
In 2021, the levels of 15050-15200 proved crucial for trend determination; a sustained move above these levels is imperative to bring stability/pullback rally in Nifty. Given that Bank Nifty held the lower levels of March, sustenance above 32,000 will be key for a short-term bounce back.
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Metal and IT sector fell by 8-9 per cent in a week. What led to the price action? Will the weakness continue in the coming week as well?
Both metal and IT sectors rallied significantly off the 2020 year low. However,, since the past few months, both indices have stepped into a corrective phase. A minor pullback rally can’t be ruled out. Although, any major upside seems unlikely.
Where are pockets of value emerging in this falling market?
Infrastructure index is gradually outperforming vis-à-vis Nifty on the ratio graph. Overall price structure hints at a decent upside room for the infra space, hence the current decline should be seen as a buying opportunity in marquee stocks like Larsen & Toubro and , and selectively in robust cement stocks like and .
On a day when things are falling in double digits – are there any selling rules which investors and traders should follow?
Post a sudden sell-off, the market usually takes time to stabilize. Investors should accumulate stocks which are holding ground and likely to out-perform the benchmark index. F&O traders should be focused on risk management to keep their trading positions adequately hedged.
The S&P BSE 500 index also saw a cut of more than 5 per cent – plunged by about 30 per cent in a week. What does technicality suggest? What should investors do?
RBL Bank is trending lower for the straight fourth year. This year, all pullback rallies in the stock have been short lived till date. Sustenance above levels of Rs 80 could trigger a relief rally.
What is your take on small & midcaps? Will they see further selling pressure compared to largecaps?
Smallcaps and midcaps were prominent underperformers in the recent past. At the current juncture, we need to be extremely selective in this space. From a near term perspective, given that broader indices are likely to remain choppy, one can accumulate large cap banking stocks with a long-term perspective.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)