Due to geopolitical risk, crude oil ie crude remains beyond $100 per barrel. At the same time, this has created a situation of volatility in the equity markets.
Time to Add Quality Stocks in Portfolio: The geopolitical risk has increased due to the war between Russia and Ukraine. There is uncertainty in the markets around the world. India VIX on Nifty is up more than 7 percent today at the level of 28.65, which is indicating a big uptick in the market. Due to geopolitical risk, crude oil ie crude remains at its 8-year high beyond $100 per barrel. This has created a situation of volatility in the equity markets. The rate hike cycle corner is near and meanwhile the economic growth trajectory is facing risks. In such a situation, it is not easy to choose quality stocks for investment. Brokerage house ICICI Securities has listed some such quality stocks, which have the potential to give better returns even in the volatility of the market.
Why will the Indian economy benefit?
Between Russia and Ukraine crisis there have been some economic sanctions on Russia by US/Europe, but it seems that no major sanctions are expected. Because it can have wider economic implications for them as well. In the short term, the stability in crude prices has a great hope of recovery in the global markets. From an economic perspective, we believe that the risk of high dependency for utilities/trade on a single country is now at the fore. And thus the “Plus One” policy will grow rapidly on a global scale. This will benefit economies like India in a big way, which will benefit from PLI and some other initiatives by the government.
The market is ready for a technical pullback rally!
Technically, there is a strong support for Nifty at the level of 16200. If the index remains above it, pullback options will remain open. Apart from this, if Nifty closes above 16800 with fall in VIX, fall in crude oil prices then index can move towards 17200. Time-wise, the index has not corrected for more than three consecutive weeks since April 2020. In the current scenario, Nifty has been correction for three weeks, so Nifty is ready for a technical pullback rally in the coming weeks.
Fall in the market means investment opportunities
Fundamentally, the mid to long term constructive thesis on Indian equities remains intact amid economic recovery. With macroeconomic coolers consolidating, strong capex spend and strong corporate earnings (Nifty earnings growth expected at 21.5% CAGR from FY 2011-24) the market outlook looks strong. Therefore, the current correction of the market should be taken as a fresh investment opportunity. The stocks of companies which are showing sustainable growth can be included in the portfolio.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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