Sensex, Nifty gain amid broad-based buying, analysts advise avoiding aggressive bets

Equity benchmarks the Sensex and the Nifty wiped off early losses to edge higher on March 14 amid broad-based buying across sectors. Analysts expect the Nifty to consolidate in the 22,400-21,800 range in the near-term, supported by outperformance of largecaps over mid-and smallcaps.

The Sensex and the Nifty gained up to 0.6 percent to 73,097 and 22,146. About 2,615 shares advanced, 1,095 shares declined, and 92 shares unchanged.

Ajit Mishra, Senior Vice-President of Technical Research at Religare Broking, cautioned investors from taking aggressive positions in this volatile market and suggested they rejig portfolios towards largecaps or large midcaps. "It is crucial for Nifty to hold above 22,200 level over the next few days as it wouldn't indicate a positive trend reversal," he said.

Analysts at ICICI Securities expect Nifty to consolidate in the broader range of 22,400-21,800 amid stock-specific action. They highlighted that a close below 21,800 for Nifty would lead to an extended correction, therefore, keeping it a crucial level to watch out.

After a day's blood-bath, broader markets recouped losses to gain on March 14. The Nifty Midcap 100 and Nifty Smallcap 100 indices surged up to 3 percent, while fear gauge India VIX cooled off by 5 percent to trade around 13 level.

Some analysts observe this trend as temporary bounceback as broader indices enter an oversold territory, while others believe that this is the start of further correction.

Analysts at ICICI Securities believe that the smallcap index would be poised for a comeback post a couple of percentage point correction. "Historically, in a secular bull market phases we have observed that small cap index have a tendency to undergo secondary correction to the tune of 17 percent. In the current scenario, with the 15 percent correction already behind us, we believe small cap index would be poised for temporary pullback," they said.

On the contrary, analysts at Kotak Institutional Equities find valuations of several mid-and smallcap stocks to be expensive. "We are not sure if the current correction marks reversal of market fundamentals. But, we believe that many low-quality stocks still have a long way to fall," they said.

The stress in mid-and smallcap stocks came after market regulator Sebi asked mutual fund houses to moderate their investments in mid-and smallcap schemes due to build-up of 'frothy' valuations. These mutual fund houses will present their stress test results on March 15.

Barring Bank Nifty, all sectors swam in the sea of green. Nifty Metal and Oil & Gas indices were the top sectoral performers as they gained over 2 percent each.

On the macro-front, India's economic picture appeared stable. While the retail inflation eased to 5.09 percent in February from 5.1 percent in January, the wholesale-based inflation (WPI) slightly lowered to 0.20 percent in February from 0.27 percent in the prior month.

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