Stock market today: Indian benchmarks extended the decline for the 5th consecutive session, with benchmark BSE Sensex losing around 3300 points while NSE Nifty slumped around 1000 points. The Nifty Small-cap 100 and Nifty Mid-cap 100 indices have slipped into negative territory in 2022, i.e. year-to-date or year-to-date.
According to stock market experts, this weakness is mainly due to foreign portfolio investors (REITs) fishing for money in the markets. They expect the market to continue to remain weak as the breakdown is visible in the majority of indices like real estate, Nifty smallcap, midcap, etc.
However, consider that there is a possibility of a strong rebound in IT stocks, as the TCS stock buyback could trigger further buying in the sector.
“This weakness in the markets is due to REITs and FIIs fishing for money from the Indian markets. Prior to Christmas, the FII had gone on a long winter break due to the week-long Christmas festival followed by the New Year. At that time, they were in a net short position when the NSE Nifty was at 16,400 levels. When they returned from vacation, Nifty was above 18,000 and they fished for silver again in the Indian markets. If we look at the data, FIIs sold shares worth ₹11,000 crore in the last three trading sessions last week,” said Ravi Singhal, Vice Chairman of GCL Securities.
TCS holds the rebound trigger
Singhal believes that the weakness in the Indian stock market could continue for another 1-2 sessions as a good number of quality stocks gave a breakdown on the chart pattern and a lot will depend on the 2022 Union budget.
He added that if anyone is looking forward to taking advantage of this continued sell-off, they should look at TCS shares. “Large-cap IT stocks are expected to announce a stock buyback that could trigger further buying in new-era IT stocks.”
“Those who want to play it safe can buy TCS shares at around 3700 for ₹3800 levels per action for a short term goal of ₹4300 per action level. However, one must maintain a strict stop loss at ₹3550 levels while taking this stance,” said Ravi Singhal. He said the rebound in TCS will trigger further buying in other large-cap IT stocks like HDC Tech, Wipro and Infosys.
Expecting a strong rebound in the Indian stock market, Sumeet Bagadia, executive director of Choice Broking, said: “Nifty has strong support at the 17,000-17,100 levels and once it hits 17,500 at the close, we may see strong bullish levels from 17,800 to 18,000. Similarly, Bank Nifty has strong support at levels around 36,500 to 36,700. will have reached closing levels of 37,500. After the breakout, we can soon expect levels of 38,500-39,000 on the Bank Nifty Index.”
However, Bagadia also believes that the takeover of TCS could trigger a rebound in Indian markets as DIIs may consider safer options like TCS following the FII sell-off.
Warning: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of Mint.
Never miss a story! Stay connected and informed with Mint. Download our app now!!