Mohit Nigam, Head - PMS, Hem Securities said that in the coming week we can see levels of 17,500 acting as strong resistance and 16,500 levels may act as a strong support to push the market upwards.

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Mohit has exposure in the capital markets across forex, equities, bonds, and Investment Banking with Axis Bank and Goldman Sachs respectively.

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In an interview with Zeebiz's Kshitij Anand, Nigam said that the overall trend of the market is up so the March series is expected to remain stable or in a bullish mode. Edited Excerpts –

Q) Nifty50 is already down more than 3% in the week pushing the index below crucial support levels. What led to the price action?

A) The major reason which pushed the Indian markets in the southward territory this week is the escalating tensions between Russia and Ukraine which lead the investors to press the panic button and move out of risky assets to safe assets.

Crude Oil prices rose above $105 for the first time after 2014 and also put some pressure on markets. We have witnessed a sharp rally today due to a rally in global indices.

We believe that the volatility might continue to persist over some time due to uncertain global cues. We advise our investors to maintain liquidity and add quality stocks in significant dips.

Q) India VIX climbed 31 levels as of Thursday. What does the fear index tell us about future movement in markets in the coming week?

A) India VIX or India volatility index measures the volatility and fluctuations in the market. Yesterday VIX rose to 31 indicating panic and extreme volatility on the back of rising tensions between Russia and Ukraine.

The news of Russia attacking Ukraine during the early hours of Thursday morning sent negative signals to the already jittery market. The coming week can witness some volatility as more events will start unfolding regarding the tussle.

Markets were positive on Friday despite increasing sanctions on Russia coupled with rising crude oil and natural gas prices.

The index helps short-term investors to sense market movements. Long-term investors should not be worried as good recovery is always expected after such falls.

Q) How is the market likely to trade in the truncated week? What should be the strategy – buy the dip, or hold fresh buying till market stabalise?
 
A) In the coming week, Indian markets in spite of the global pressure may give some good upward movement as it has already corrected significantly from its all-time high.

The coming week is important in many ways, as it is the first week of the last month of FY22.  In the coming week we can see levels of 17,500 acting as strong resistance and 16,500 levels may act as a strong support to push the market upwards.

Investors should keep a close eye on quality stocks available at a fair valuation. Long-term investors can use this opportunity to invest in quality stocks as we are in a structural bull run which is going to continue for the next couple of years.

These small corrections which happened last week amid the Russia-Ukraine crisis are going to be part of the journey.

Q) Based on the February expiry – what is the kind of action you see for the March series amid geopolitical concerns, rise in crude oil etc.

A) Benchmark Indices across the world witnessed a bloodbath in Feb month of 2022 after the Ukraine-Russia war.

The Sensex and Nifty 50 which was trading at its all-time high at around 61,000 and 18,000 levels are now trading near 56,000 and 16,500 levels.

Brent crude futures reached at its seven-year high levels due to war-like scenarios between the above two countries and also because of this, Russia’s energy export could be disrupted which can play a major trigger for a further bullish trend in crude price.

These events are short-term fallouts and history has shown that these types of tensions are short-lived, and markets generally recover sharply from these drawdowns.

Based on history, this time also Investors may ignore these developments and can plan a gradual entry into long term Portfolios. The overall trend of the market is up so the March series is expected to remain stable or in a bullish mode.

Q) Broader market underperformed benchmark indices – how should investors approach this space. Time to book profits in overvalued, high beta stocks? What are your views?

A) Bond yields have risen, oil prices have climbed, and geopolitical fears have risen, adding to the headwinds. As the results of state elections and the FOMC meeting are both awaited, volatility is expected to remain high until the middle of March.  

We expect broader markets to continue to outperform the Nifty50, as small and midcap stocks always perform strongly when the economy recovers.

India's long-term story remains unchanged, as we are in a structural bull run that will last for the next couple of years, the last few trading sessions have presented a terrific opportunity for long-term investors to accumulate quality companies at discounted prices available at fair valuation.

Q) Sectorally, Oil & gas index fell the most. What led to the price action? Additionally, realty and telecom also saw a similar fall. What led to the price action?

A) In the Last 1 week, markets witnessed a huge correction. All major indices like Oil & Gas, Reality, Telecom fall more than 5%.

Many stocks among the sectors have corrected more than 10-15%. Major reasons for the selloff were rising crude oil prices, an increase of other commodity prices, margin pressure in latest quarterly results, Fed's indication of a rate hike in the future, and War-like situations between Russia and Ukraine.

As we rely heavily on crude oil imports and we may face high inflation which leads to fall in margin and that will lead to more corrections among the Index in near future. We believe investors should be cautious before investing in such stocks.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)