Dalal Street Corner: Metal and Bank stocks help market break three-day losing streak; what should investors do?

Metals and bank stocks led together as the stock market snapped a three-day losing streak to end in the green on Thursday’s monthly derivatives expiration day. It was also the first time the market closed with gains this week. The benchmarks Nifty50 and Sensex gained 0.9% and 0.94% respectively as the main indices settled at 16,170.15 and 54,252.53 on Thursday.

“On the day of monthly expiry, the index finally managed to close in the green after three days of losing streaks,” said Palak Kothari, Research Associate, Choice Broking.

Led by State Bank of India, Nifty PSU Bank closed up 3.16%, with HDFC Bank, Axis Bank and ICICI Bank also leading the rally from the front. In metal, Tata Steel led the rally in Nifty Metal, which ended up 2.6% on Thursday, with a gain of over 5%. JSW Steel was another of the index’s top gainers.

Meanwhile, Nifty FMCG was the only index that settled with some cuts on Thursday.

However, foreign institutional investors continued their selling spree as they sold shares worth Rs 1,803.06 crore on Wednesday.

As the market continues to exhibit an extreme level of volatility, we have gathered the views of experts who read the current trend and provide insight into the future trend..

Vinod Nair, Head of Research at Geojit Financial Services.

After the strong sell off, the market showed signs of exhaustion and may rebound in the short to medium term. Technically, the broader market is in oversold territory and fundamentally valuations are just below the three-year average. One of the main reasons for the current correction is selling by FIIs and a reduction in domestic purchases.

A drop in FII sales will be an important reason for the rebound. For this, the actions that will be taken by the FED and the RBI in June will be an important factor. In addition, it should be noted that the tax measure announced by the Indian government to control inflation is positive for the internal market”

Ajit Mishra, Vice President – Research, Religare Broking Ltd

Markets traded volatile on the day of the monthly derivatives expiration and gained more than one percent, taking a breather from the recent decline. The tone was negative in the first half, however, a strong rally in the selected index majors not only pared the losses, but also pushed the index higher.

We’re seeing a respite in line with global peers, but participants shouldn’t read much in a single-day rebound. The momentum in the banking pack is certainly encouraging, however, Nifty needs a decisive break above 16,400 for any sustained rally.

Keeping day-to-day risk and intra-day volatility in mind, participants should limit leveraged positions. Investors, on the other hand, may start to nibble as quality stocks are available at a good price.

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribhas

The Nifty, after a positive start, stumbled near its major hourly moving averages and slipped below 16,000 in initial trade. It moved lower to test the 78.6% retracement of the recent leg of the pullback, which was near 15900.

The key Fibonacci level prompted the bulls to action. Consequently, the index experienced a sharp reversal with which it broke above the major hourly moving averages as well as the upper end of a reverse declining channel on a closing basis.

The Nifty is now ready to retest the 16400 hurdle, which will be the key level to watch at the close. The Bank Nifty gave a strong upside breakout today and should continue to outperform going forward.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services

There are indications that the market is stabilizing and consolidating around current levels. For the Indian economy, high crude prices will continue to be a major headwind and strong REIT sales, which are expected to continue, will be a major impediment to market recovery.

The market trend continues to be uncertain and therefore what investors can do now is buy high quality stocks for the medium to long term. Financials, especially the big banks, are good medium to long-term buys.