The Nifty made a V-shaped recovery in the past month after a panic-led fall, indicating that the market has stabilized in the immediate term.
Small and midcap indices have corrected by around 25-30 percent, while some stocks have plunged over 50 percent this year. But they seem to be nearing their bottom as negative sentiment has caused a deep correction in these stocks.
The Nifty on a weekly basis closed with gains of 0.54 percent.
The Nifty made a V-shaped recovery in the past month after a panic-led fall, indicating that the market has stabilised and bottomed out in the immediate term.
On the weekly chart, correction phase seems to be tighter and a sideways movement is expected. The market is expected to be trading in a range-bound manner unless trade war fears and macro (issues) escalate further.
Bank Nifty seems to be trading in choppy waters, but has maintained a strong support at 26,000 levels. Since June, Bank Nifty has been trading in a tight range and we expect a sideways movement in the short term.
As far as other indices are concerned, small and midcap indices have corrected by around 25-30 percent and some stocks by over 50 percent. They seem to be nearing their bottom as negative sentiment has caused a deep correction in these stocks.
Good quality small and mid-cap stocks can be bought for higher returns in the portfolio.
Plenty of stocks hit fresh 52-week lows in July compared the ones which hit 52-week highs. The absence of buying in broader markets is likely to cap upside for markets.
Markets have shown high volatility in the past few months due to weakening rupee, high crude oil prices, trade war woes, and political ambiguity.
When markets are facing this kind of volatility, it is best to be patient and hold the stock instead of following the herd and selling them when the prices have fallen.
The stocks hitting lows need not necessarily be bad, but an unemotional assessment of quality check has to be done before taking any decision. If nothing has changed fundamentally, then they should be held on and added more in the portfolio.
Top 3-5 positional calls which could give handsome returns to investors in next 1 month?
Yes Bank seems to be a good positional call as it has had the longest consolidation and has taken support at 200-DMA. ACC has decisively reversed the corrective fall and is likely to move higher.
Buy on dips should be a strategy for this stock. Endurance Technologies, which has made a crossover with its 20- and 50-DMA, is indicating a good positional buy. It has consolidated and stayed above 200-DMA in this corrective phase.
MORE WILL UPDATE SOON!!
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