How should investors position themselves in the current sell-on-rise market? Here's what analysts recommend

Stock market today: Sensex, Nifty see sell-on-rise mood. 

• Sensex and Nifty settled flat after a volatile trading session.
• IT sector weakness and global cues kept markets subdued.
• Experts recommend focusing on sectors with clear earnings visibility.

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The equity benchmark indices Sensex and Nifty settled almost flat after a volatile session on Thursday as caution ahead of the US–Iran talks kept investors on the sidelines.

The markets opened higher but pared gains as the day progressed amid persistent sell-on-rise trends, a pattern seen in recent sessions as well.

The Sensex dipped 27.46 points or 0.03 percent to settle at 82,248.61. During the day, it climbed to a high of 82,579.16 and fell to a low of 81,970.47, gyrating 608.69 points. The  Nifty eked out a gain of 14.05 points or 0.06 percent to close at 25,496.55.

Ajit Mishra, Senior Vice-President (Research) at Religare Broking, said the absence of strong domestic and global cues and weakness in IT and select heavyweight stocks were weighing on sentiment, though support from some key sectors was limiting the downside.

"The problem lies with lack of any favorable cues from both domestic and global front and pressure in IT and select heavyweights from across sectors are also weighing on the sentiment. However, resilience in banking, auto, metal and energy is keeping the participants occupied amid the prevailing consolidation phase and keeping the pace of decline also capped. We suggest focusing more on continuing with stock-specific approach until we see clarity over the next directional move in the index," he said.

Sonam Srivastava, Founder and Fund Manager at Wright Research, said liquidity trends and price action are diverging, resulting in a sell-on-rise structure, and advised investors to focus on fundamentals rather than index moves.

"We are in a market where liquidity and price action are moving in opposite directions. While FIIs have turned net buyers at the headline level, the flows are concentrated and tactical, not broad-based conviction buying. Domestic institutions and HNIs are using rallies to lighten positions, especially in pockets where earnings upgrades are not keeping pace with valuations. That creates a sell-on-rise structure.

There are three forces at play. First, earnings dispersion has widened. A narrow set of large caps is delivering, but mid and small caps are facing margin pressure and slower top-line growth. Second, positioning was crowded after the sharp rebound from the lows, so every bounce becomes an opportunity to rebalance risk. Third, global uncertainty around rates and geopolitics keeps risk appetite tactical rather than structural.

In this environment, investors should focus less on index direction and more on balance sheet strength, earnings visibility and reasonable valuations. High beta trades tend to get sold into. Quality, low leverage businesses with pricing power are more resilient when liquidity turns volatile. Staggered deployment and disciplined asset allocation matter more than aggressive dip buying,” she said.

Sunny Agrawal, Head of Fundamental Research at SBI Securities, said volatility driven by global news flow and sector-specific pressures, particularly in IT, was impacting the benchmarks, and advised investors to stay focused on sectors with earnings visibility.

"There is a lot of volatility on account of global news flow. So due to one reason or another, we are seeing some pressure in either one of the sector on a regular basis. A case in point recently IT is significantly under pressure because of panic due to this AI led adoption and its likely disruption in the business model of IT company. Again, one has to keep in mind that IT is a very significantly heavyweight sector in terms of index weightages, right? So that is something which is optically putting pressure on benchmark indices.

What we feel is that investors should ultimately stick to sectors which are likely to do well going ahead. A case in point PSU bank seems to be very well placed to deliver a healthy earning growth. Auto and auto ancillary as the space look very attractive going forward. NBFC is non banking financial services company because of the great card are likely to enjoy a better margin going forward. So investors should focus on such sector. Metals and mining because we have seen a very sharp up move in the commodity prices during the last 12 months and we believe that we can likely spend on various new age technology. The demand for critical minerals and key minerals metal components will keep on rising going forward. So metals and mining looks to be well placed to deliver a healthy earning growth. And basis recent trade deals, we feel that aerospace and defense is the one sector which can do well going forward. So net net investor should ignore the volatility which is led by one sector or another or due to any global news flow and should focus on all the sectors which we discussed recently," he said.

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