If the seasonality trend is to be considered, Sensex may surprise in the next few days as the index is down 2% since Day 1 of Navratri. Among all major sectoral indices, BSE IT is the only one to have given negative average return in the last 10 years while BSE Bankex has been the top gainer with the average gain going beyond 5%.
Between Navratri and Diwali, bank stocks have given positive returns 7 out of 10 times, auto 8 out of 10 times and consumer durables 9 out of 10 times.
When it comes to stock-specific performance, three counters – TVS Motors, VIP Industries and Petronet LNG – have a track record of giving positive returns in each of the last 10 years from Navratri to Diwali.
In the last 10 years, the average return given by TVS Motors during the festive season is 14%, for VIP Industries it is 8.6% and 6.6% for Petronet LNG.
If we narrow down the screen to the last 3 years, at least 6 stocks – Kernex Microsystems, Kopran, Mazagon Dock Shipbuilders, PC Jeweller, Shivalik Bimetal Controls and Ujjivan Financial Services – have given double-digit returns on all the last 3 occasions.
What should investors do?
For the remaining four trading days of the week before Sunday’s Diwali Muhurat trading session, investors have taken a bullish approach given how Wall Street is expecting that interest rates are nearing the peak.
On the domestic front, the September quarter earnings season turned out to be broadly in sync with expectations. Fitch’s raising of India’s mid-term GDP growth forecasts to 6.2% has only sweetened the deal for bulls.
Consumption is turning out to be a big theme with sectors like consumer durables, realty and auto in focus.
“Indian markets will be under the grip of extreme volatility amid global market weakness, rising inflation pressures and the weakening rupee, but the overall sentiments on the street are expected to be optimistic in the near-term period. Short-term traders may keep their existing positions hedged to save themselves from global volatility,” said Atul Parakh, CEO of Bigul.
After a short-lived correction which took the index to oversold territory, Nifty has been exhibiting signs of a short-covering rally for the last 3 sessions.
“While technical analysis paints a favorable picture, the primary challenge remains the breach of the 19,707 resistance level, cushioned by robust support at 19,225. The 200-day moving average at 18,650 remains a solid foundation for the long-term perspective, cementing Nifty’s current bullish trajectory,” said Prashanth Tapse of Mehta Equities.
Dalal Street veteran Sanjiv Bhasin said Nifty is headed towards 19,700-19,900 levels by this Diwali and the momentum may take the index to new peaks by the end of this month.
(Data: Ritesh Presswala)
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)