Market experts say aggressive rate hikes by the US Federal Reserve and the Reserve Bank of India (RBI) to curb inflation have sparked fears of a recession and hit stocks.
The rise in US interest rates also raises a high possibility that in addition to the stock market, other markets such as debt and bond markets will see an outflow of FIIs in India in the near term, said Ravi Singh, Vice President & Head of Research, ShareIndia.
“In this momentum, Nifty can continue its sell-off and hit the 14,800 level in the coming trading days,” he added. “Investors should wait for new positions to be entered and see if sentiments turn.”
Geopolitical tensions, global correction, high commodity prices, supply chain disruptions, FII outflows, high inflation and a weaker rupee are some of the main reasons that have led to the sharp asset erosion in the markets of late.
According to Singh, both indices could show some recovery around their first strong points. “It wouldn’t be sustainable, though,” he warned.
Nifty50’s support levels are 15,100 and then 14,800 while 15,600 and 15,800 will act as resistance levels. On the downside, 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 metals, IT and financials, remained the weakest. Most sector indices have followed a sharp downward trajectory, reaching their lowest level of the past year.
“Rising inflation rates due to war-induced supply disruptions in Ukraine are weighing on metal prices, impacting operating margins and earnings growth, putting pressure on metal counters,” said the head of ShareIndia’s Research.
“IT stocks are witnessing selling pressure as margins have fallen due to supply-side pressures,” he added. “The combination, higher inflation, higher rates and FII sales have pushed the banking sector to its worst performance.”
However, he suggests some sectors to hunt for value at the moment. He said you can look at the FMCG, IT and gas sectors with a long-term view of investment.
, , , , Bharat Electronics, IEX, and are at attractive levels to go long.
He also suggested short
(Naukri), , and in the current gloom in the market.
Benchmark indices show no signs of a speedy recovery and a rebound in the trend is unsustainable, market experts say. Investors should follow the wait-and-see strategy in this scenario.
Investors can bet 40 percent of their investment at current levels, with the remaining 60 percent near 14,800 levels. “Existing investors can wait for lower levels to average their positions,” ShareIndia’s Singh suggested.
Market participants suggest that long-term investors should stick to robust fundamentals and not worry about short-term volatility.
Under the second run, Singh sees a good opportunity for investors to make money. “Adani Power,
Ambuja Cement, IEX, MCX and BSE are some stocks with good returns.”
(Disclaimer: Recommendations, suggestions, views and opinions of the experts are their own. They do not represent the views of Economic Times)