The Nifty 50 at 21,661 may be a sign of a weakening market, predominantly due to a fall in the bank index, which has been an underperformer for several months now, according to Jai Bala, founder and chief market technician at Cashthechaos.
"The price action of the markets in the last couple of sessions suggests it has been trying to close the Nifty above 21,950 but is getting resisted. It's trying to close below 21,350. It's getting resisted. This market is trying to cool off and is trying to get lower from here," he told NDTV Profit.
Benchmark indices declined on Thursday as banks and ITC Ltd. dragged after the RBI decided to keep the benchmark interest rate unchanged.
The NSE Nifty 50 lost 212.55 points, or 0.97%, to close at 21,717.95 and the S&P BSE Sensex lost 723.57 points, or 1%, to end at 71,428.43.
Bala has set a price target of Rs 210 for Bharat Electronics Ltd., with a stop loss of Rs 170. He suggests a short call on Wipro Ltd. at a target of Rs 440–410, with a stop loss of Rs 510.
Big, fast-moving consumer goods names are highly valued and the disappointment on the earnings front is triggering a sell-off, according to Aditya Shah, founder of Hercules Advisors. The Nifty FMCG closed 2.06% lower.
"Valuations in the FMCG space have been aggressive for a couple of years. Slow growth and higher valuations are a recipe for low returns in the near term," he said.
On cues from the RBI, the party of PSU banks, where they have outperformed their private peers for the last year, would start to abate, Shah said. Healthy and large non-banking finance companies and private banks will do well as the credit cycle kicks in, he said.
Watch the full conversation here:
The views and opinions expressed by the investment advisers on NDTV Profit are of their own and not of NDTV Profit. NDTV Profit advises users to consult with their own financial or investment adviser before taking any investment decision.
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