The correction phase in market could extend by another 10-15%; buy on dip, suggests Parth Nyati of Tradingo

The overall trend is bullish, and this correction will provide a buying opportunity to ride the current bull market, Parth Nyati, Founder, Tradingo said in an interview with Zeebiz’s Kshitij Anand.

Nyati has over 8 years of in-depth experience in technology and finance.

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On the upside, the 18000-18200 area has become a strong supply zone and the short-term view will remain bearish till Nifty trades below this zone while a move below 17250 can lead to a further sell-off towards the 16700 level, he said.

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Q) Markets saw a fall in momentum amid a flurry of global brokerage downgrades, as well as selling by foreign investors. What should retail investors make out of the price action? Should one stay put, buy the dip or sell on rally?

A) We are seeing a first meaningful correction after a long time and the sell-off can be attributed to relentless selling by FIIs where they have sold worth Rs15,700 cr last week in the cash market while they sold around Rs. 25,500 cr in October.

The correction may see a further extension and if it will be the first 10% correction then Nifty may head towards the 16500 level; however, the overall trend will remain bullish and such kinds of corrections will be a good buying opportunity to ride the current bull run.  

Q) What does the F&O data suggest for the November series? Which are the important levels investors should watch out for Nifty and NiftyBank?

A) The Nifty rollovers stood at 73 per cent on a provisional basis, lower than the previous expiry of 75 per cent while FIIs' long exposure in index future stands at 56% which is a sign of little caution.

If we look at the OI distribution for 25th November expiry which is scattered and does not give any clear direction however put-call ratio stands at 0.75 level that is an oversold territory, therefore, we may see bounce back from levels however there will be a risk of sell-off from higher levels.

Technically, Nifty has slipped below its 20-DMA and the near-term texture has changed to 'Sell on the rise' from 'Buy on the dip' where 50-DMA is immediate support which is currently placed at 17565 level while 17450-17250 will be the next critical support zone where we can expect the market to bounceback.

On the upside, the 18000-18200 area has become a strong supply zone and the short-term view will remain bearish till Nifty trades below this zone while a move below 17250 can lead to a further sell-off towards the 16700 level.    

If we talk about Bank Nifty then it is also showing signs of topping out near the 41500 level however it manages to close above 20-DMA which is currently placed at 39000 level.

On the downside, 38500-38000 is a critical support zone; below this, it is vulnerable for the more downside. On the upside, 40000 will act as an immediate and strong hurdle while 40500/41000 will be the next hurdles.

Q) Where do you see markets headed in November, and any key triggers (global & domestic) which one should watch out for?

A) The next week will start with auto sales numbers for October month where expectations are low while the market will also gauge the consumers' sentiments on Dhanteras and Diwali.

If we talk about important triggers for the November series, then we will have monthly auto sales at the start of the month then the market will gauge consumers' sentiments amid the festival season. The last batch of Q2 earnings may also lead to stock-specific volatility in the market.

It will be important to watch the trend in FIIs' inflows because they are selling heavily for the last few days while it will be interesting to check new investors' behavior amid ongoing correction because most of them haven't seen any meaningful correction yet.

The primary market will remain busy as there are lots of IPOs lined including big names like Paytm and Policy Bazar.

Globally, the Outcome of the US Fed meeting that is scheduled for 3rd November will be important because the market will watch that how US Fed will negotiate between high inflation and slowing growth momentum.

The trend in global commodity prices will also be important amid worries of rising inflation whereas the market will also have an eye on global macroeconomic data amid concerns of slowdown in growth momentum. Globally, Covid cases are again rising which is also a cause of concern.

Q) The multibagger of 2021 -- IRCTC saw a 40% dip from the highs which effectively puts the stock in a downtrend. What should investors do?

A) I believe the stock will remain sideways in the coming days where the upside will be capped around 1000 level and the downside will be protected around 700 level.  

Overall fundamentals are still strong for this counter, but the market will hesitate to give valuations that it was enjoying before this event because such kind of risk will remain in the mind of investors.

Long-term investors should remain invested without worrying about term volatility.    

Q) The numbers of stocks hitting a fresh 52-week high has also slowed down from 300-500 a week back to just a little over 100. Does this signal formation of a top for now?

A) Yes, there are some signs of distribution, but this is just a correction phase and this correction could be between 10-15%.

The overall trend is bullish, and this correction will provide a buying opportunity to ride the current bull market.

Q) What are your 3-5 stock ideas for the November series?

A) Bharti Airtel, Tata Motors, Sun Pharma, Gujarat Gas are some trading ideas on the long side while Axis Bank and Indusind Bank can be played on the short side for the November series.

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