Anisha summed up the factors behind the risk-off and guess what? You and I know it very well that perhaps this correction in the market is one of the most anticipated and expected corrections. At least I can tell you that over the last two months, 9 out of 10 ultra-HNI I have met are already building up some money on the side, are trading cautious, all of that. So, if that is the case, there is so much of dry powder sitting in on the side. Will it not cushion the falls which are coming in? Are we likely to fall over 8% to 10% from the recent top on the indices?
Aditya Arora: Look, yes, it is very much anticipated as valuations had stretched to exorbitant levels and a lot of pockets, especially midcap, smallcap had excess valuation, so this fall to a greater extent was anticipated. And our first level on Nifty was 24,000 and second level which we are watching out for is 23,000 and lastly, 21,000. If market corrects in tandem with the global trend, wherein Nasdaq is down about 14%, if we draw similar kind of levels, then these are the levels which we can watch out for.So, the medium-term trend is definitely disrupted and it could trend lower. It is all news driven right now. As the news flow comes in the global market that is how the markets will pan out. But if we talk about the very short term, then Nikkei is down 28% in one month. If there is any short covering rally over there, we can see a short covering over here as well.
And we are now standing at 50-day moving average, which comes at 23,850 and we made the low around those levels 23,900 on Nifty futures, so that is the important support for the market. It is very difficult to conclude whether markets will go up or down because it is a news driven environment.
So, it is better to follow a level-based approach. So, for the market, 23,750 is the support, 23,750 to 23,850, if market respects that, then we can see a short-term bounce in the market. And if I talk about let us say two to three months, then I think market is definitely headed lower towards levels like 23,000 and 21,000.
What about the individual stocks and sectors? Is there anything that you would want to kind of buy already or are you looking at selling something or is it just time to stay away?
Aditya Arora: The best thing short-term traders can do right now is stay away because when markets correct, they fall like falling knives. So, for trader, it is a very risky environment. They should follow a stop loss. But one sector which stands out in the short term is Nifty Pharma, which is doing quite well. It is outperforming the market, so that one looks good.
And second sector would be Nifty FMCG. These two sectors are outperforming the market. And I think the outperformance can continue in these sectors in the short term. As I said, 50 moving average for Nifty is 23,900 on Nifty Futures, so until that is respected, one can play upside in these two sectors and basically I like these two sectors right now.