Avoid Nifty till 5,400; bet on IT stocks: Experts

On suggestions to trade the Nifty, Mayuresh Joshi of Angel Broking says that the events that have unfolded over the past few hours and the RBI's response to stem the rupee's fall, have made it difficult to take a call on the Nifty at this point of time.

"It is obvious that the Nifty is heading downward on fears of capital controls and tapering of quantitative easing (QE) programme expected to kick-in from September. So, unless the finance ministry soothes nerves, there will be little respite in the market's fall," he told CNBC-TV18.

Nooresh Mirani of Amsec Analyse India offers his perspective on how to trade in the day's market after it tumbled over 200 points down. "The biggest problem in trading the Nifty is polarisation towards the top 20 stocks. The strategy is to stop looking at the Nifty and go stock-specific. Only when the Nifty is at lower levels of around 5,400 and when Reliance returns to 800 or ITC to around Rs 310, is the time to plan long positions. Till then, I suggest investors avoid the Nifty."

Joshi explains that a strong earnings season was one the reasons for the IT index to hold ground as the bourses fell steeply. "Positive management commentary and strong deal -pipeline for most IT companies including tier-I companies like Infosys, HCL Tech and Wipro helped as the market started to slip. Add to this the benefits of the rupee depreciation and high valuations. So on a structural view, HCL Tech on declines looks like a promising bet along with Tech Mahindra and KPIT Cummins."

On indicators on the possible downside on the Nifty if it breaks the 5,500 level, Mirani advises looking at specific stock breakdowns. "Continue to stay with the shorts till a equilibrium is reached at around 5400."

On the Bank Nifty, Mirani adds, "The Bank Nifty has been falling for a few weeks before the Nifty did. So, the breakdown was around 10,300. Now the next level is closer to 9000-9200 which is the bottom equivalent to Nifty at 4800 which it touched in 2012. So, 9000-9200 is a point where investors can look to pullback. Till then, if investors are short, I suggest a trailing stop loss at 9800 and continue towards 9000-9200."