September 24, 2022

Steps & Stages

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stock market crash: After a sharp fall last week, should you buy the dip or sell on rise?

New Delhi: After falling about 4 per cent last week, domestic equity markets were trading lower again on Monday thanks to a slew of global and domestic factors, with inflation being the biggest worry. After the recent selling pressure, investors are hunting for a prudent approach in a volatile market. They are wondering if the correction would be over soon or should one short the market on rise.

Market experts have a mixed opinion on the current market situation. However, they are suggesting to be cautious and look for stock specific approach in the market.

Sumeet Bagadia, Executive Director, Choice Broking, said the market has reacted more violently on the down side whenever there is a rise or short-term buying is observed in the index. The upside movement is limited till May month expiry, he said.

“There might be different approaches for investors and traders,” he added. “Long-term investors have a favourable time to re-enter the market and ride on blue chip companies and remain invested.”

Chaos and high volatility must not be a worry for long-term investors and in the short-term one should look for less volatile and inflation immune stocks such as defensives, experts suggested.

Jatin Gohil, Technical and Derivative Research Analyst, Reliance Securities, said selling pressure in the benchmark indices is likely to continue this week. “Partial profit booking would be a prudent approach for investors,” he said.

“Short-term investors or swing traders may opt for sell on rise approach till Nifty sustains 17,150 levels,” said Bagadia. “Well performing sectors must be kept in line for short-term opportunities.”

Reading technical charts and other indicators, market experts suggest that bears may continue their dominance on Dalal Street and selling pressure may sustain in the near term.

Bagadia said that the Nifty may find support around 16,200 levels, breaching below the same can show more downside till 15,800 levels while on the upside 16,900-17,000 may act as an immediate hurdle for the index.

Commenting on Nifty Bank, he said it has support at 33,800 levels while resistance was at 36,000 levels. “Till the time the index didn’t sustain above the 17,000 mark sell on high is preferred,” he advised.

Nifty has the next major support at 16,000 levels and the 16,650-16,800 zone would act as a hurdle in case of any rebound, said Ajit Mishra, VP Research, Religare Broking.

“However, since global cues are largely dictating the trend, we recommend focusing more on overnight risk management and maintaining position on both sides,” he added.

Pritesh Mehta, Lead Technical Analyst – Institutional Equities, YES Securities, said that every rally off an oversold zone has been sold into. Multiple overhead hurdles implies that Nifty must climb a wall of worries and break the negative structure.

Lack of follow-through moves & inability to maintain momentum has confirmed overhead resistance between 16,900-17,000 zones, he added. “With Bank Nifty, financials and IT not showing any leadership, sell on rise strategy would be fruitful.”

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

https://economictimes.indiatimes.com/markets/stocks/news/after-a-sharp-rise-last-week-should-you-buy-the-dips-or-sell-the-rise/articleshow/91429281.cms