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"Understanding the Current Market Trends: Where are the Investment Opportunities Now?"

Writer's picture: MeMe

The current market conditions are creating substantial confusion for most of the investors. You do not see a definite breakout and NIFTY has tested the all-time high of ~22750 but is unable to move upwards and keeps falling from this level. Twice it has touched these levels and corrected 3%. At this level, there is no strong support and if the correction continues then the next support level is around ~21200 (± 50pts) which would be approx 4% from current level and 7% from all-time high respectively. The current level of 3% down from the top cannot be termed as a market correction as such and you will only notice a momentum shift when there is a substantial 7-10% correction which will further decide the market trends. Bank NIFTY is a tad bit more under pressure with 4.2% down from the top but the chart pattern does not indicate a channel breakdown yet. There are many factors leading to this confused state of the market. A few prominent one's are the ongoing Lok Sabha Elections where the sentiments are strong in favor of the ruling party however, the margin of win or the number of seats expected is understood to be too ambitious to achieve. To my belief, the above has also resulted in FIIs trying to find green pastures somewhere else and have been consistently Net sellers in the current month of May'24 while DIIs are trying to grab the opportunity and maintain Net buying side. It is assumed that DIIs will be the major driving force in the coming future however, the real rally will only be seen when both FIIs and DIIs find value in Indian markets at current levels and continue to buy pushing NIFTY towards a new all-time high. We may notice this mostly post-election with rate cut being another catalyst if the inflation data is positive and appears under control. In the current situation, it is highly advisable to stay put and do nothing. There is no need to rejig the portfolio if you are fully invested. It is the time to remain cautious. The Market Mood Index (MMI) as per tickertape determines that we are in a FEAR zone cautiously hovering over Extreme Fear zone. Although it indicates bad market conditions and may move towards worse but this is where value buying levels can be identified. From an individual stocks perspective, there may be few opportunities for those who are comfortable to take a certain amount of risk and won't deter if there is a further broad market correction of 5-10% UPL has taken a heavy hit due to a slowdown in agrochemical consumption with the worst-ever performance in recent times. There has been a sharp correction in stock price and the company moved out from NIFTY50 Large Cap to Mid Cap due to loss of market capitalization. The quarterly results will be declared tomorrow on 13th May and you won't see an extreme turnaround but there are green shoots noticed and can give a decent 20% upside from current levels in one years time-frame. Similarly, IDFC First Bank as well has seen a correction due to margin pressure and capex deployment but this will help the bank grow further and increase its footprint in newer locations. The long-term growth trajectory remains positive with confidence in their execution strategy under the current management. From current levels of ~76 the stock can easily gain 20% till 91 level in one years time hoping the interest rate cut will drive growth further. The last one where I have seen a fair level of correction is in Angel One as the stock has corrected ~36% from its all time high and there is a decent possibility of 30% upside again in one year time frame. The company's financials appear healthy and the growth trajectory will continue with the introduction of newer products. Some headwind is expected due to competition heating up with the entry of deep pocket giants like Jio Finance however market expansion is possible as financial awareness grows and the uncatered masses start their financial journey which is a big chunk of our population. There is always something for everyone. PS: These are my personal viewpoints and I do own a few of the above stocks and it is highly advised to make informed decisions when making any financial decision.

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