Rajiv Kapoor, Vice-President at Trustline Securities, says that buying quality stocks at reasonable valuations is a prudent strategy for the moment.
A short-term range for Nifty50 has shifted lower and that it is now expected to trade in the range of 17,500-18,000 over the next few sessions.
While the fundamental leading indicators are positive, the valuations seem strained in the short-term, because of high energy costs, inflation, steep price rally and possible rate hike by the RBI in February 2022.
After such a mad bull run, investors should be cautious about the valuations and must not enter or chase any stock without proper analysis and research.
Apart from that, after meaningful corrections, they can enter and accumulate quality counters and then an upward move is expected.
The domestic markets are riding on the hope that Indian companies’ earnings momentum will continue in the September quarter of FY22.
By and large, most of the momentum with respect to Q2 earnings is already considered both on the positive and the negative sides in the market.
Tactically, the entire BFSI space can be surprising in the backdrop of a credit growth pick-up, low provisioning, improvements in asset quality and good revenue visibility and pretty good numbers from giants like HDFC Bank, ICICI Bank and Axis Bank but weaker performance from the likes of Kotak Mahindra Bank and RBL Bank.
Broad-based technology adoption across geographies and verticals to benefit IT companies and mid-high single digits can be expected from this sector, where the top picks would be TCS and Wipro.
Traders rolled over fewer positions to the November derivatives series due to uncertainty in the market as the Nifty formed a large black-bodied candle on the daily chart and sided below the 20-day simple moving average, which is broadly negative for the market.
Realty and Infrastructure: This sector has started showing green signs of recovery after three years of underperformance and coming out of 10 years of prolonged consolidation.
Banking: Banks will continue to strengthen their financials by raising capital and adding to provision buffers, continued improvement in asset quality, margins improvement, on-balance sheet provisioning buffers, and reduction in stress related to COVID-19 with their systematic approach.
Textile: The second COVID wave slightly impacted the textile sector’s supply and demand dynamics.