Even as the market struggled in shades of red amid intense profit booking, Rohit Srivastava, founder and market strategist at Indiacharts.com, expects Indian benchmark indices to stabilise in a couple of days. Instead of pointing fingers towards signs of a weaker-than-expected majority for the BJP-led NDA, Srivastava blamed a pile-up of short-term traders focused on booking profits to be the cause of the slump in the market today.
"Sometimes the market is aggressive, and then there is profit booking on the day of the event. This has got nothing to do with whether the numbers are good or bad. It's just that a lot of short-term traders pile in and then it results in them booking out or trying to take gains on," Srivastava said.
Meanwhile, he also retains his bullish stance on the market and suggests investors with a long-term perspective to use the dip as a buying opportunity.
"Irrespective of whether the BJP gets 360 seats or 320 seats, the country will still get a stable government. So in that sense, buying the dip makes sense for an investor buying in the cash market," Srivastava said.
He anticipates the Nifty 50 to stabilise around 22,400 in the upcoming sessions after experiencing bouts of volatility. This level coincides with the 61 percent retracement of the low of approximately 21,800, tested in mid-May.
Moreover, Srivastava envisions a significant case for sector rotation to emerge following the intense profit booking in the market. He suggests that investors might consider moving away from PSU stocks in the near term, as these counters have already entered overbought zones.
"This shift away from PSUs will only be triggered due to near-term overbought conditions, and it doesn't necessarily imply that their long-term trajectory for the segment has concluded," he added.
Regarding sectors likely to lead during such periods, Srivastava highlights banking, information technology, and FMCG as potential frontrunners. He believes that the underperformance of these sectors in the recent market rally suggests the potential for an upward movement now.
"There's a strong argument for banking to take the lead. Additionally, there's potential for FMCG to stage a comeback, and even the likelihood of information technology experiencing a significant resurgence," Srivastava said.
"Several Nifty heavyweights have not been actively participating, but they could now start playing a more significant role in the overall market upswing. Overall, I believe there's a compelling case for sector rotation to take center stage," he added.
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