June30 , 2022

nifty today: Bhool Bhulaiyaa! Why Nifty bulls are buying the dip amid sell-on-rise calls



After crashing nearly 3,000 points last week, Sensex bounced back to over 1,200 points on Tuesday. Amid macro headwinds and rising interest rates, many analysts have been asking investors to use any significant rise in the market as an exit opportunity.

However, there was no sign of investors rushing for the exit door on Tuesday. Market sentiment was in favour of winners as nearly 2,500 stocks out of over 3,400 stocks on BSE were trading in the green. At least 43 stocks hit 52-week highs and 171 were locked in upper circuit.

“After a significant drop in share prices last week, a dead cat bounce rally was expected. The rebound in global stocks is also impacting Indian equities positively. Today’s rally is more about global cues. There is a lot of bottom-fishing happening in the market at this stage. However, it is not a broad-based rally. There is a cherry-picking going on in largecap stocks which have fallen in the last few days,” Kranthi Bathini, Director – Equity Strategy, WealthMills Securities, told ETMarkets.

Bluechip , down 25 per cent from record highs, was the top gainer in the Nifty pack to trade higher by over 6 per cent at Rs 2,093. , , , , and were among other Nifty stocks trading higher by 3-4 per cent each.

Bathini is of the opinion that investors must use the opportunity to exit momentum stocks and leveraged positions.

Rahul Shah, Co-Head of Research at Equitymaster, said today’s rally may have to do more with long-term investors trying to do bargain hunting instead of traders making a quick trade.

“Back in October 2021, when the Sensex had reached a new lifetime high, the Sensex PE was close to 32x, which has now fallen to a much more reasonable 21x,” he said, adding that whether this will sustain is anybody’s guess, but this is a good time to start redeploying money for the long term as the India growth story is pretty much intact.

Vikash Kumar Jain of global brokerage firm CLSA pointed out that whether it is a bear market rally or the start of a bull market, bond yields would be the key defining factor.

“What has gone unnoticed by the equity market is the fact that over the last two-three days yields have corrected by 20 bps. For any significant rally to happen, some events need to happen to cool off the worst fears of yields increasing or inflation being out of hand,” Jain said.

Dr V K Vijayakumar, Chief Investment Strategist at

, is worried about the Finance ministry’s latest Monthly Economic Review, which warns about the stress in the government’s finances caused by the rising food and fertiliser subsidies and revenue forgone from cuts in petrol and diesel taxes. “Both fiscal and current account deficits are likely to deteriorate, surpassing budget estimates. This macro headwind can turn out to be a headwind for markets too, particularly if crude remains at elevated levels,” he said.

The market expert suggests investors seek the safety of fundamentally strong largecaps during this phase of market turbulence.

Deepak Jasani, Head of Retail Research,

Securities, said having formed a double-bottom at 15,183-15,191, Nifty could head towards 15,670, if no new negative developments crop up on the horizon.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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