Indian share markets dragged on Monday, and domestic stocks lost over Rs 6 lakh crore in value within a few minutes amid the Russia-Ukraine geopolitical tensions. Oil prices soared to a seven-year high, stoking fears of inflation and strong foreign outflows. With benchmark BSE Sensex falling about 1,400 points, investor wealth declined by Rs 6.27 lakh crore, according to BSE market capitalisation data. While traders and analysts have varying views on how much correction can be seen in near term, most advise investors to buy on dips in select sectors like banking, pharma, IT, metal and power. They suggest various levels in the range of 16,500-16,900 on Nifty for accumulation for mid to longer term.
Buy the dips, but stay highly selective in picking stocks; watch 16,900
“The markets saw a volatile and negative reaction to the geopolitical tensions arising between Russia and Ukraine. However, if we take the present correction from a technical perspective, the Nifty has rebounded from a crucial support zone of 16900-17000. Furthermore, the level from where the Nifty rebounded also represents a confluence area formed by two support pattern trend lines,” said Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services.
“So, the current low of 16916 becomes very crucial on a closing basis. If we see violation of this point, we may see incremental weakness coming in. So long as the Nifty is able to stay above this point, there are higher possibilities of a technical pullback happening. The index is likely to see a technical pullback the longer it remains above 16900 levels on a closing basis. Investors can buy the dips, but stay highly selective in picking stocks. So long as Nifty is above 16900, shorts must be avoided. Present levels and any point until 16900 can be used to make select purchases. If the technical pullback occurs on the expected lines, then 17300-17400 can be expected,” he added.
IT, pharma, metals attractive at 3-5% more correction from current levels
“Sensex and Nifty may trade near 56000 and 16800-16500 respectively in near term. Investors may enter for value buying at lower levels, wait and watch strategy should be followed. Value sectors like banking, IT, pharma, metals and power seem attractive at around 3-5% more correction from current levels,” said Ravi Singh, VP & Head of Research, Share India Securities.
Start investing at 16800-16500
According to Gaurav Garg, Head of Research at CapitalVia Global Research, the reason for Monday’s market crash is US warning on Sunday that Russia might invade Ukraine any time and even invent a pretext for an invasion, reiterating its commitment to protect ‘every inch’ of NATO territory. Russia has over 100,000 troops stationed near Ukraine, and President Vladimir Putin has accused the US of failing to meet his demands. “On these tensions, crude oil prices are also increasing which is negative for the Indian benchmark. All the broader indices registered a sharp fall,” Garg said.
“Technically, the NSE has not managed to trade above the 100-day SMA and the market has seen sharp downfalls. Currently, Nifty is having support at 16800, investors have to wait and watch as of now and start to invest in the market between 16800-16500. This price range is a good accumulation range for mid to longer term. Investors must focus on fundamentally strong companies to invest and stay,” he added.
No worries till Nifty trades above the 16800 level
Parth Nyati, Founder, Tradingo said, “Indian markets witnessed a sharp fall on the back of rising geopolitical tension between Russia and Ukraine. This geopolitical tension is leading to a sharp rise in crude oil prices which is another headwind for Indian equity markets. World markets were trying to digest record inflation in the US but the surge in geopolitical tension spoiled the mood. There is some sentimental impact of the bank fraud issue of ABG group on banking stocks but it doesn’t have a material impact as it is already part of NPA.”
“Technically, Nifty is trading near-critical demand zone of 17000-16800, and the ‘buy on dip’ texture will be continued till Nifty trades above 16800 level its 200-DMA however there are multiple resistances on the upside till 17650 where 17300/17500 are immediate hurdles. There are no worries till Nifty trades above the 16800 level but if Nifty slips below 16800 then things may become ugly,” Nyati added.
Ukraine crisis can trigger a sharp rebound in markets led by large-cap bluechips
“Sentiments have turned very negative for the short-term with the heightened tension over the Ukraine crisis. Weakness in global markets is the direct fallout of the Ukraine crisis. Crude at an eight year high is another major macro concern for India. If crude remains at levels of $95 for an extended period of time, the RBI will be forced to revise upwards its 4.5% CPI inflation projection for FY23. Continuation of the accommodative monetary stance too will be difficult. While all these are negatives, diffusion of the Ukraine crisis can trigger a sharp rebound in markets led by large-cap bluechips,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said, “17000-17800 is the range for the index. While it is a wide range, traders should exercise extreme caution at the current juncture. Stop losses are large and whipsaws cannot be ruled out. Hence it is better to wait for a close below 17000 to re-evaluate the trend. Closing below 17000 is imperative for a bearish view to get activated. On the upside 17400 is the current resistance level.”
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