The ongoing market situation resembles a bear market and gains in Nifty are followed by selling. Rohit Srivastava, Founder and Market Strategist, Indiacharts.com, in an interview with MintGenie said defensive sectors like pharma may be a good bet at this juncture.
Please share your views on the market. As per your technical analysis, what could be the bottom of the market?
We are in a bear market, and the current market rally can be classified as a bear market rally that is now in its late stages. Once the Nifty rolls over from near the 17000 mark we may witness a decline that can go back to retest the lows of 15180. The worst-case scenarios as of now will appear closer to 14200 near the bottom made in April 2021.
Is this still a 'buy on dips' market? At what level of Nifty should we begin buying?
The time horizon plays an important part here. Long-term investors are still being rewarded for patience in this market. The most recent upheaval in financial markets has not resulted in a major breakdown across the board. Despite a decline in stock prices most of the gains have been held. Thus investing remains an ongoing stock-specific process. So, if you have a 5-year time horizon, this is a buy-the-dip market. Between the top at 18000 and wherever we get the next bottom, investors only need some active risk management.
What could be the range of the rupee against the dollar? For how long may the domestic currency remain under pressure?
The rising dollar is a trend that is far from over and is global in nature. The BOJ has continued with its cheap money policy and the ECB may remain slow in raising rates. This interest rate differential is playing into making the dollar index strong and thus pushing the rupee lower. USD-INR may continue towards 85 in the current round of devaluation with small pullbacks in between.
What are your views on the IT sector? After a correction, it has started moving up on valuation comfort but do you think the uptrend may sustain in the current macroeconomic environment?
There is a good case for IT stocks, but they correlate strongly with US markets and the US economy. In that light, there is still a risk to earnings growth for the sector that might not be fully priced in. I think at least one more quarter of weakness for the sector.
What sectors look attractive to you at this point? Should we bet on the auto sector which has seen healthy gains this year so far? Is the valuation of the auto sector a concern for you?
Defensive sectors like pharma appear to be in a better spot as of now in a difficult market.
How should one manage risk in such market conditions?
A higher level of cash helps keep us capable of taking advantage of market panics to buy good stocks low. So, actively manage your portfolio by creating cash on rallies.
Disclaimer: The views and recommendations made above are those of the analysts and not of MintGenie.