Market Volatility Likely To Rise But Auto Sector Looks Positive, Say Analysts
The India VIX, often referred to as the 'fear index', has been over 17 for much of Wednesday and has seen a surge of over 60% in the last six days.
Volatility is likely to surge in Indian equities as the benchmark Nifty 50 is out of a cup-and-handle pattern on the weekly timeframe, indicating a turn away from short-term bullish positions, according to market analyst Jai Bala.
"Volatility is likely to increase. I am expecting a bigger decline to come around 22,400. The bullishness will be extreme short-term," said Bala, founder and chief market technician at Cashthechaos.
The India VIX, often referred to as the "fear index," has been over 17 for much of Wednesday and has seen a surge of over 60% in the last six days. High volatility typically coincides with market uncertainty and potential declines in stock prices.
In yet another range-bound trade, India's benchmark indices ended flat as voting trends in the ongoing general election made traders cautious.
The NSE Nifty 50 settled flat at 22,302.5 and the S&P BSE Sensex declined 45.46 points, or 0.06%, to end at 73,466.39. Nifty hit an intraday low of 22,185.2, and Sensex touched 73,073.9 earlier in the session.
Bala has two short calls in the banking space—Bank of Baroda and RBL Bank Ltd.
Auto and auto ancillary companies like Bharat Forge Ltd. and Hero MotoCorp Ltd. have announced their financial results in line with estimates and the sector will benefit from higher expected sales post-monsoon, said Vijay Chopra, managing director and chief executive office of Enoch Ventures.
"Bajaj Auto will be my first choice, followed by Hero and TVS Motor Co.," he said.
Concurring with the optimism in two-wheeler auto stocks, Bala said he is positive on Hero MotoCorp, neutral on Bajaj Auto and negative on TVS Motor.
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