Markets To Continue Rally After Major Events This Week, Say Analysts
India's benchmark indices reversed gains from yesterday and ended sharply lower on Tuesday.
Markets are in consolidation mode but will rise after major events this week, such as the interim budget and the U.S. FOMC meeting, according to analysts.
"Monday's rally was more than what was expected and we are seeing some profit-booking on Tuesday," according to Dharmesh Kant, head of equity research at Chola Securities. "One should take a back seat now, must be on the fence and watch the market for a couple of days."
The heat in the market should come down to normal and the climb will resume after the two big events—the interim budget and FOMC meeting, Kant said.
India's benchmark indices reversed gains from yesterday and ended sharply lower on Tuesday as losses in Reliance Industries Ltd., ITC Ltd., and Bajaj Finance Ltd. weighed on it.
The NSE Nifty 50 settled 215.50 points, or 0.99%, lower at 21,522.10, and the S&P BSE Sensex ended 801.67 points, or 1.11%, down at 71,139.90.
The chart pattern indicates the decline we are seeing right now will be absorbed in the next day or two, said Nagraj Shetti, senior technical research analyst at HDFC Securities. "The consolidation movement and the weakness in the second part of the session indicate a 'buy on dips' strategy."
"The Nifty 50 index continues to face selling pressure over the 21,800 level, which was observed in today’s session," said Avdhut Bagkar, a technical derivatives analyst from StoxBox. The price action highlighted weakness post-slipping beneath 21,605, displaying an immediate obstacle, Bagkar said.
Shetti is expecting an upside bounce from the current level. "Nifty is facing resistance at 21,750 and after a minor weakness, we will see a decisive upside break out of 21,800 levels."
In terms of valuations, at current levels, the value appears to be in the private-sector banking space, Kant said. "That is one space where you can safely call it where the valuations are near mean levels." The valuations, even for PSU banks, have gone up a lot, Kant said.
According to Shetti, metal and PSU banking stocks have some more possibility of upside.
