Pressure On Banking Stocks To Persist In Near Term, Say Analysts

Banking stocks will look weak in the near term, and the benchmark indices are set for consolidation after seeing about a 3,000-point rally, according to market analysts.

As far as the Nifty is concerned, the loss of gravity needs to catch up, according to Hemen Kapadia, senior vice president of institutional equity at KR Choksey Stocks & Securities Pvt. "We have had a 3,000-point move and nothing to show for it in terms of connection."

The Bank Nifty looks weak and is heading to the 47,400 level, Kapadia said. "Setup (Bank Nifty) is wobbly in the near term, but in the medium term, it is a clear buy."

Overnight, U.S. investors have become a bit cautious, as the markets are fearing that the rate cut may not come as soon as it was expected, according to Sudip Bandyopadhyay, group chairman, Inditrade Capital Ltd.

"The U.S. economic data has been strong, and last week, the employment number again beat expectations, and that does augur well for the rate-cut scenarios," Bandyopadhyay said. This is leading to some risk aversion, and that is being reflected globally and, to an extent, in the Indian market, he said.

On Monday, the benchmark indices snapped their two-session rally to end lower after opening with marginal gains. The day's fall was due to a loss in shares of financial services, fast-moving consumer goods and information technology companies.

The NSE Nifty 50 ended 199.70 points, or 0.92%, lower at 21,511.10, while the S&P BSE Sensex lost 665.73 points, or 0.92%, to end at 71,360.42.

It is not a bad idea to go short on Nifty, as it is on the cusp of breaking the 21,500 level, and a correction on the index will be confirmed if it does, according to Kapadia. Metal space is just on the cusp of a correction; the auto index looks heavy, and the IT index has called off a bit, he said.

However, Bandyopadhyay said that there is nothing to worry about in the banking and IT space in the medium term, as the fundamentals are strong. In a couple of quarters, recovery will be visible in the IT sector, according to him.

NDTV Ltd. shows a clear buy call as it has been on a consolidation for the last 5–6 weeks, Kapadia said. He suggests a 'buy' at Rs 282, with a target of Rs 312 and a stop loss of Rs 267.

Kapadia gave a sell call to Alkem Laboratories Ltd., with a target of Rs 4,985 and a stop loss of Rs 5,285.m Laboratories Ltd., with a target of Rs 4,985 and a stop loss of Rs 5,285.

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.