Despite the Nifty moving within a limited band of 24,180–24,215 during the session, banking stocks provided strong support to the market, reflecting the best buying interest. Analysts say the recent dip may have already seen a temporary low, although global uncertainty continues to keep traders on alert.
Rahul Sharma from JM Financial Services pointed to reduced volatility as a key factor behind the improved sentiment. “Yeah, so the VIX is lower today which is largely due to the rebound we’re seeing in oil prices and that should help sentiment as well. Yesterday, we created a low panic in the Nifty around 23,700 and then said it was just bought that was seen on the screen and after today’s gap the markets bounced back above 400 and bounced back above 400. Maybe a little bit here and there. To be stable but eventually things should slowly improve from here,” he told ET Now in an interview.
However, he cautioned that markets remain vulnerable to global developments, particularly geopolitical pressures. “So, we’re very selective in this type of market, staying away from high-beta names because the market is probably not out of the woods yet. War is something we’re not good at predicting.”
In the current environment, Sharma believes that defense sectors are the safest bet for traders. “So, in a market like this it’s better to be on the defensive and a defensive position in a market like this is obviously pharma. So the pharma index is impacting the long-term, it’s an index that hasn’t seen any selling pressure and today we’re seeing a good rebound in the pharma space.”
He noted that many pharmaceutical stocks exhibit strong technical arrangements. “So, Aurobindo Pharma’s likes are coming from a few weeks of resistance. We see Glenmark giving a breakout, the best performer in the pharma space today. We also see Sun Pharma similarly well positioned. So it’s better to get into a bag of pharma stocks for a business perspective unless it’s very good for global stability and it’s unstable. The pharma space.”
According to Sharma, a major shift in market sentiment will depend on geopolitical developments. “And for Nifty to turn the tables and make a big move in the space, it would have to be a big cease-fire announcement coming out of the Middle East.” Given the unpredictable environment, he suggests a shorter trading horizon. “So till then, it’s better to stick to pharma and nifty, it’s better to be a day trader in this kind of market, than to look at the carry positions and see gaps and gaps that ruin your trades if you’re on the wrong side.”
From a strategic point of view, Sharma highlighted key support levels for the benchmark index. “Yes, so as a strategy, the key Nifty level to keep an eye on is 23,500. Yesterday, we got close to it. Let’s say because of the volatility, if that level emerges, it’s a very good level to go into your portfolio and go into Nifty ETFs, actually, like the ETF Nif midcap.
He also remains constructive in the best names of the public sector. “And banking as we know PSU banks are the best placed setup even after this correction, so something like SBI remains a strong buy in this kind of volatility and we feel the stock should come back to where it was a few days ago.”
For now, market leadership seems to be concentrated in a few resilient pockets. “So, PSU banks, apart from public sector enterprises, and pharma are the three sectors where we are looking for opportunities in the long term,” Sharma said.
With volatility still a key feature of the current market environment, experts suggest that investors remain optimistic and focus on sectors that demonstrate relative strength while closely monitoring global developments.
