Amid a fierce competition between bears and the bulls, selling is being witnessed at higher levels, Aamar Deo Singh, Senior Vice President-Equity, Commodity & Currency at Angel One said. Given that the current trading week is truncated, investors are expected to be cautious as markets are trading at record highs, influenced by news flows and global sentiments, he added.
Nifty closed with gains of 0.33% on a weekly basis thanks to Fed’s dovish commentary. There were no major domestic triggers that could have supported the market. What do you expect in the holiday-shortened week?
Aamar Deo Singh: Amidst the global investor sentiment that has been positive since the US Federal Reserve took an accommodating approach towards interest rate cuts in 2024, markets managed to recover last week and close in the green. Since the majority of international markets are still on the rise, the ripple effect can also be seen in home markets. However, amid a fierce competition between bears and the bulls, selling is being witnessed at higher levels. Given that the current trading week is truncated, investors are expected to be cautious as markets are trading at record highs, influenced by news flows and global sentiments.
What are the next important levels for Nifty and Bank Nifty and which triggers are expected to impact the movement?
Aamar Deo Singh: The benchmark indices Nifty and Bank Nifty gained marginally last week, with gains of 0.33% & 0.58% WoW after a major sell-off witnessed the week prior. This pullback was on the back of short-covering and some buying interest from the investors post the positive global sentiments.
The indices continue to trade with a positive bias, with crucial support for Nifty seen around the 21,700-21,800 zone whereas resistance on the upside is seen around the 22250-22300 zone. For Bank Nifty, the levels to watch out for are 46,300-45,800 on the downside as support levels, whereas resistance is seen around the 47,300-47,800 levels.
The likely key triggers for next week are US GDP numbers, domestic current account and external debt numbers, and monthly F&O expiry, which could add to the volatility in the markets.
The tide for Indian markets has turned since the Sebi warning of froth in broader markets, though the Nifty Mid and Smallcap still gained this week. What would be your advice to confused fence sitters who want to enter the market but cannot decide?
Aamar Deo Singh: Both the Nifty Smallcap and Nifty Midcap indices bounced back last week, gaining 1.72% and 1.44% respectively WoW. The bounce back appears to be more on the account of investors entering these stocks post the sharp correction witnessed across the board in most of the small and midcap stocks after the spectacular rally. However, looking at the charts, it is clear that tops have been made for both the indices, which are unlikely to be broken in a hurry.
Investors wishing to invest in these two segments, should adopt a judicious approach, looking at valuations and quality of the stocks, before venturing into them. Further, adopting a stock SIP mode coupled with building a portfolio from a long-term perspective should be the way forward, given the parliamentary elections ahead, which could have a significant bearing on the markets.
How should one move with the IT stocks given it was the worst performing sector this week with Accenture’s guidance spoiling the mood even more?
Aamar Deo Singh: The week gone by, has been really hard for the IT sector, with the Nifty IT index alone losing by over 6% WoW. Post Accenture’s cut in revenue guidance numbers, the entire IT pack witnessed sharp sell-off with the benchmark heavyweights including the likes of Infosys & TCS, correcting by over 7% WoW.
Investors appear to have been caught on the wrong foot all of a sudden but technically, most of the IT stocks including the Nifty IT index, had been indicating that a short-term top had been formed a few weeks prior. But when markets or sectors correct, most investors tend to try to get out quick which is though never the best strategy. In case anyone is investing from a long-term perspective, identifying quality stocks across non-correlated sectors and investing in tranches is ideally the best strategy.
In which sectors, stocks do you see money making opportunities?
Aamar Deo Singh: Sectors that hold promise in coming years include the likes of defence, housing, railways, power & infrastructure to name a few. However, investors would do well to stick with the leaders in these sectors and accumulate the stocks on corrections, with a long-term perspective. Also, investors need to bear this in mind that given that markets are trading close to record highs, sudden bouts of increased volatility is likely to be the norm, rather than an exception. So having the conviction in the Indian growth story and remembering the fact, that in the long-term, the law of averages and power of compounding would add to the overall performance of the portfolio, should be the mantra.
The top gainers this week have been Swan Energy, Praj Industries and Zomato while Tata Investment, Coforge and IIFL have been among major laggards. What should investors do with them?
Aamar Deo Singh: Swan Energy witnessed a sharp pullback last week, gaining 17% WoW but it appears that a top has been made, hence investors should ideally look at booking profits. Praj Industries was also a top gainer, up by 16% WoW, with crucial resistance seen around the 560-580 zone. In case this level is not taken out, investors can look at booking part profit and trailing the rest below the crucial support zone of 450.
Zomato has been on an uptrend, clocking gains of almost 9% WoW, and investors would be well advised to stay put in the stock as consistently trading above the 175-180 zone, would lead to the stock rallying towards the 200-220 mark. On the downside, the stock is well supported around the 140-145 zone.
For investors invested in Tata Investment, this stock has been extremely volatile over the past many trading sessions, and those stuck in this stock should look at exit opportunities on any pullback, with crucial support seen around the 5200-5300 mark.
Coforge has been battered sharply, down by over 15% this month itself, clearly reflecting a shift in investor interest in the stock. Those long, can look at exiting on any pullback with crucial support seen around the 5200 mark. IIFL has been hit post the RBI intervention, and the stock continues to slide, losing almost 9% WoW. Investors should stay from the stock, till clarity emerges and those holding the stock, should watch out for any news flows in the near future, as the stock is down by over 50% from its all-time high of 703 in October 2023.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
