Indian stock markets suffered a double whammy today. Geopolitical tensions continue to be a major deterrent to market sentiment. At the same time, due to the crude oil prices crossing $ 110 per barrel on Wednesday, the risk in the market was increasing. Santosh Meena of Swastika Investments told in an article written in Livemint that looking at the benchmark index, the market was showing very weak on Wednesday. However, there has been some buying at lower levels in the broader market i.e. mid and small cap stocks.
Santosh Meena said that commodity stocks showed good performance due to rising commodity prices. On the other hand, shares of life insurance companies also saw buying at lower levels. At the moment, news related to the Russia-Ukraine crisis and the rise in crude oil prices are the major factors of market volatility.
He said that technically, the market texture has weakened due to Nifty falling below the 200-day moving average. However, Nifty is trying to establish its foothold in the 16400-16200 zone. However, the confidence of the bulls in the market will increase only when it crosses the level of 17100. On the other hand, if Nifty slips below 16200, then 15900 will be the next important support level.
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Bank Nifty is trading near an important psychological support level of 35,000. If it manages to sustain this level then we may see some short covering towards 36350-36750. However, if it slides below the 35,000 level then 34000 will be the next important support level.
Santosh Meena said that there is weekly option expiry in the market tomorrow i.e. Thursday, where derivative data is scattered and there is no trust among the put underwriters. However, the put-call ratio of 0.84 is a bit overbought. Bank Nifty 35,000 Put underwriters are still showing some confidence so we can expect a return from here.
He said that we are in a structural bull market like 2003-2007 and the last rally saw 3 corrections of over 30%. We are seeing the first good correction in the market and long term investors should not panic with this downtrend. This fall will provide a good opportunity for buying, where huge wealth can be created in the next 3-5 years. Hence, one should stay invested in the long term and look for buying opportunities in this correction.
Short-term traders should keep their investments low due to a lot of uncertainties, where they should have a trading stop loss of 16,200 for long positions. Investors should focus on such businesses, whose focus is on the domestic market. For example Capital Goods, Infrastructure, Real Estates, Banking etc.
Santosh Meena said that the IT sector may continue to perform well. The downside in this sector could be an opportunity to buy some quality stocks. At the same time, auto stocks are also looking better to buy in terms of risk-reward ratio.
He said that our favorite top picks in this fall are Thermax, KNR Construction, L&T, SBI, ICICI Bank, Infosys, KPIT, Tata Power, Tata Motors, Minda Industries, SBI Life Insurance, Bajaj Finserv, Canfin Home, Shobha, Brigade Enterprises, Kajaria Ceramics, and Reliance Industries.
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