As benchmark indices face recent pressure, market expert Rohit Srivastava suggests that the Nifty is approaching a crucial technical support zone, potentially signaling the end of the current correction phase. Investors are advised to exercise patience as the market nears a possible turnaround.
The Nifty, after reaching a low of 22,182 in April and peaking near 24,601, is now approaching a 61% retracement level at approximately 23,077. This level is seen as a major support, with only 80 to 100 points of downside remaining, indicating limited risk. Srivastava advises waiting for confirmation before making entry points, as the market may soon shift from a downward to an upward trend.
Among sectors, banking emerges as a strong candidate for investment during the current market decline. Srivastava notes a divergence between the Nifty and Bank Nifty, with the latter showing resilience by not breaking its May lows, unlike the Nifty. This positive divergence suggests banking stocks may offer relative strength amid market volatility.
“So, from the bottom that we made in April, which was at 22,182, and then we peaked in April near the end at around 24,601, and we take a 61% retracement of that, we get a level closer to 23,077. So, that, I think, becomes the final major support for this dip that is going on.”
Rohit Srivastava
Energy and metals sectors are also gaining momentum, driven by improving commodity trends and strong demand dynamics. Srivastava highlights recent gains in industrial metal prices, such as copper, zinc, and nickel, which could extend the outperformance of metal producers.
The automobile sector, while important, remains in consolidation mode. Srivastava believes a decisive uptrend will require a turn in the interest-rate cycle. Although certain segments, like two-wheelers and Tata Motors passenger vehicles, have shown strength, a broad-based rally is yet to materialize.
“As a sector, it is something we have been avoiding for most of the year, and I have not exactly been positive on it for a long time. So, IT is not a sector I recommend at any point in time till the worst is very, very certainly over.”
Rohit Srivastava
The pharmaceutical sector presents a constructive outlook, with the Nifty Pharma index breaking out of a two-year consolidation beyond 23,500. This technical breakout supports sustained gains over the medium to long term, potentially reaching 30,000-plus in the next one to one-and-a-half years.
Background
The Indian stock market has been experiencing a correction phase, with benchmark indices under pressure. Market analysts have been closely monitoring technical support levels to gauge potential turning points. The Nifty's approach to a key support zone is seen as a critical juncture that could influence investment strategies.
As markets navigate correction and uncertainty, Srivastava's insights suggest limited downside ahead. Investors should watch for sectors like banking, metals, energy, and pharmaceuticals, which appear well-positioned for future leadership. Meanwhile, IT remains a sector to avoid until clearer recovery signs emerge, and patience is advised for the auto sector.
