Despite all apprehensions, the market showed no sign of weakness or consolidation. However, at this level buying a stock is not at all suggested, especially for retail traders.
That does not mean the market is going to crash now. What I mean is to stay cautious and stay away from smallcaps and midcaps.
India VIX has gone up 8.49 per cent to 14.5400 and Nifty is most likely to face stiff resistance at 17,500 and 17,625 levels in the next week. As of now, no indication of any break in the trend. In the Hilega-Milega indicator, the price is below volume in the daily time frame on the green side and unless the price is above volume, correction is not expected.
The support has moved to 17194-17,050.
The near-term resistance for Nifty seems to be at 17500 and if it crosses this level then, 17627 can be the next important level, according to Fibonacci projection.
As per the sector rotation analysis, both Bank Nifty and PSU Bank Index is most likely to underperform compared to the broader market, though Bank Nifty is improving. FMCG and consumption stocks are also underperforming compared to the broader market.
The pain in the auto sector may likely continue for some time for a variety of reasons, such as chip shortage and subdued demand.
Which Sectors to Avoid
Stay away from Nifty Pharma, PSE, Auto, Energy, Media and the PSU Bank Indices as they are in the lagging quadrant in the relative rotation graph.
Which Sectors to Watch Out
Keep a close watch on the Capital Goods and Realty sector as they are likely to do better. Larsen & Toubro, Godrej Properties, DLF or Sobha Developers can offer a great return.
Should You Invest Know at Current Levels
While I am not saying that a market crash is going to happen, the time has come to exercise caution. It’s better to stay in cash, gold or short-term instruments. The market will give you the opportunity to buy, but you must have cash for that. You must have money to invest when the right opportunity arises.