Every stage of the market offers opportunities for both the bulls and the bears hence, it is very important to determine which set of sectors or stocks are likely to outperform and then invest accordingly, Arun Kumar, Market Strategist at Reliance Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) It was a volatile week for Indian markets which started with a gap down, and then towards the close we saw RBI MPC presser which led to a sharp downtick on May 22 wiping out most of the gains. What was the reason why markets fell – is it banks or the negative growth rate which weighed on markets?
A) The Indian equity market struggled to find support after Monday’s (May 18) steep fall. This action impacted the sentiments such that the leveraged positions shrunk and worries over the normal resumption of economic activity (growth concerns) led to lack of buying interest.
Both buyers and sellers failed to dominate this week. A clear close outside the range of 8,800 and 9,200 is required to determine the next directional bias.
Q) NiftyBank fell more than 2 percent on Friday (May 22). What should investors do if they have a bank heavy portfolio? How can they minimise losses, and if new investors who can take risk do you think some of the banks are available at reasonable valuations? Many banks are trading near their 52-week low.
A) The Bank NIfty is weak on near and medium-term timeframes. The price setup and the oscillators on these time horizons indicate that the trend is down.
However, a failure to hold its previous swing low of 16,116 could lead to a panic selloff.
Since we expect the overall volatility to prevail, investors are better off to select the leaders as they offer both liquidity and relatively lower volatility.
Traders need to tighten their stops, while the investors have to wait for a proper confirmation of a change in trend before committing new funds.
The Nifty 50 index is struggling to find a directional bias. It is broadly moving within a band of 8,800 and 9,200. These levels are crucial.
A strong close outside this zone will determine the direction. Therefore, as the index trades near any of the mentioned levels, one should take adequate care to protect their respective positions.
Q) Negative growth is something that might have got investors a worried lot. Do you advise investors to turn conservative from aggressive in this period?
A) Every stage of the market offers opportunities for both the bulls and the bears. Therefore, it is very important to determine which set of sectors or stocks are likely to outperform and then invest accordingly. One should also focus on prudential risk management.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.