What is your view on the benchmark index as it has been on a downtrend since the beginning today? Just yesterday, we saw the dead cat rally quite a bit, and today we’re seeing selling pressure again. Where do you see the benchmark heading? Could that 23,500 mark actually be used as support, or could the benchmark break through it?
Rohit Srivastava: The setup is not very good. The October peak will likely remain for the rest of the year, so any rebound will be a countertrend. So the increase we saw from November to December is like a 50% reversal. We are now entering the next stage of decline, but I don’t think it’s over. My view is that the worst case scenario is probably heading towards 22,800 or 22,200, probably within the next two weeks.
I think the next major level with meaningful support will probably be late February or early March, but I think that’s what this setup is really telling us. So until then, we’ll probably see lower lows, lower highs, and a little bounce or retracement along the way, but that’s going to be the trend.
If we look at Bank Nifty, there is a rather long-term and very interesting technical pattern known as the Head and Shoulders pattern that has been playing out since May and June of this year. And that neckline, which we’re breaking through today, was about 49,800. If we actually close below 49,800, that would indicate a return to a range of probably 47,100 to probably 46,200 or so in the coming weeks, so that’s the setup for the two major indexes that we’re looking at.
I have a question about Nifty Bank. In fact, Nifty Bank is at a 6-month low and as you said it is at and below a cautionary level, the banking industry could come under more pressure due to poor performance mosquito?
Rohit Srivastava: It appears that banks can do very well when the economy is strong because they go both ways, but they can actually perform worse when the economy is weak. However, a slowdown in the economy leads to a slowdown in the banking sector, so low valuations remain low, and that is the risk banks currently face.
All it can do is ultimately limit the size of the decline, perhaps compared to what mid-cap and small-cap stocks are likely to do. Because that’s where the biggest damage is finally happening, and likely still is today, after people have been talking about it for months. 6 to 12 months. Banks may look better in that sense, but again, I’m not buying banks here. We’re probably only looking at some of the non-banking defensive sectors.
But what is the defense sector you are talking about? Because these are just some of the sectors that are still trying to find a foothold there, like pharmaceutical companies and some of the automated counters, and even chemicals and fertilizers. The universe is trying to maintain some ground. So, do you have a favorite area at the moment?
Rohit Srivastava: The only thing that has held up through this period is healthcare. In fact, it’s been better than the market since November, and that may just be its saving grace in the end. In other words, it might not work today.
So today could be an exception. Because everything is on sale. But like I said, over a period of time, it has shown some performance. So the money has to go somewhere, and it’s going to drug companies. They have historically also been into FMCG, and that sector is still showing weakness, but on a slightly more medium-term basis, most of the sell-off in FMCG could be completed. There is a gender. So, I’m just looking at the FMCG index. It hit the bottom for the second time around 55,380.
There’s a chance it won’t break even if you do it a third time, and I think that’s a good thing. So we have to look at whether the 55,380 hold in the FMCG index sells off this time, but perhaps it’s a defensive area that could do well in the short-term, three-month, four-month horizon. I think it could be.
Has the bottom really hit and will the FMCG situation reverse? And secondly, another sector that has held up really well is the IT sector, as the market has fallen from the highs of 10% decline in the Nifty. Even when I did, I managed to hold out. Nifty IT did quite well. In fact, Nifty IT has been up over the past year, gaining 25-odd percent. Do you think such a movement will emerge in the IT field as well?
Rohit Srivastava: First, let’s be clear on FMCG, FMCG is not a long-term bottom, it’s a medium-term one, more trade-based, and if the levels I mentioned remain a sell-off. , you will be paying attention to the upside. Since it has already fallen, it will probably be harder to fall then.
IT indices do not belong to the same zone. This is because the IT index has just started to sell off and is more likely to follow the US market than anything else. If you actually look at the Nasdaq, up until the beginning of January, the Nasdaq has outperformed and held up, and maybe that’s why we’ve seen the Indian tech sector do so well.
But now it’s starting to wane. We’re seeing weakness in both the S&P and Nasdaq, but these are the strong parts of the market, and the weaker parts are industrials and secondaries. So now that we’ve seen the weaknesses in the technology industry, I don’t think it’s time to see them as a defensive measure.
In fact, we should be concerned. You have to be a little careful. I think tech stocks may fall along with global markets.
It may not function as a defense. So the only line of defense could be, as I said, somewhat long-term pharma, somewhat medium-term FMCG, but not the IT sector.
