INSUBCONTINENT EXCLUSIVE:
By Vikas Jain Where are we: In the last five weeks, since August 2018 — after touching an all time high at 11,760 levels — the Indian
equity markets have seen a vertical sell off
The weakness in the markets intensified further post the breakdown of its 200 day average at 10,780 levels and macro concerns emanating from
higher crude prices and with rupee deprecation to all time low against the US dollar
Nifty shed its year to date (YTD) gains, trading 12% down from its 52- week high
Except for IT sector, which is holding strong on back of rupee depreciation, all sectors have declined between 15% to 40% from their 52-week
highs.
What is in store: We expect the Nifty to form a trading bottom in the current week and expect a strong pullback as there are multiple
supports placed in range of 9,950-10,100 levels on multiple time frames
Nifty is trading 8% away from its short-term DMA and historically it has always bounced back from these levels
Upside will also be capped near to its 200 day average and a time-wise correction could set in for the next few weeks
Any correction in crude oil prices and rupee would be an icing on the cake for the up-move
The volatility index, India VIX closed at 20 levels, there is major resistance on the higher side near to 25 levels.
What could investors
do: The Q2 results would start from the current week and it will provide more clarity in terms of FY19 earnings
Among sectors we prefer pharma, consumer and private banks as they appear to be favourable at current levels
Passive investors can consider investing in ETFs like NIFTYBEES and JUNIORBEES.
(The author is Senior research analyst, Reliance
