Sensex down 2400 points from highs. Experts suggest these stocks for bottom finishers

Nifty Bank index too shed near 300 points and came down at 43,115 levels, around 1,000 points lower from its record high of 44,151 mark. Except Adani Enterprises and UltraTech Cement shares, majority of the Sensex, Nifty and Bank Nifty heavy weights were trading in red zone.

According to stock market experts, immediate short term reason for Indian stocks’ nosedive is Japanese government’s decision to change their bond return range that has strengthened Yes in forex market. In fact, the Bank of Japan has slightly loosened the shackles of its 10-year yield target and the announcement in this regard has already been done. Apart from this, FIIs tendency of squaring off their position ahead of the arrival of Christmas festival is other reason for negative sentiments on Dalal Street. They said that fear of recession is still looming around as US Fed’s hawkish commentary is still oscillating in the minds of market investors. However, they said that those who believe in bottom finishing, they can look at banking and capital goods stocks in current correction.

Speaking on the reason for stock market crash today, Saurabh Jain, AVP — Research at SMC Global Securities said, “The Japanese government has changed their bond interest rate range that has strengthened Yen again major global currencies in the forex market. Apart from this, US Fed’s hawkish stance has once again put fear of recession among stock market investors.”

Echoing with Saurabh Jain’s views, Ravi Singhal, CEO at GCL Securities said, “FIIs have a tendency to square off their position before arrival of Christmas festival. So, the trend is expected to happen again as FIIs are on the side of net seller on stock exchange records. However, they are looking net buyers at SEBI’s records as SEBI includes FIIs investment in primary markets as well. As a good number of IPOs have opened this month, FIIs are looking on the net buyers side at SEBI’s records. However, when it comes to stock market investment, FIIs are mainly on net sellers side.”

“The second round of selling in the global markets is occurring in response to the hawkish US Fed policy, which is also exerting pressure on Indian equity markets. Institutional investors are concerned about the premium valuations despite the robust fundamentals of the Indian equity markets. While a recession is a fresh fear for international equity markets, higher interest rates are a major concern in the near term. In China, a rise in COVID instances is also creating some issues. Investors should view declines as a buying opportunity in high-quality stocks that are least impacted by the global crisis because the prognosis for the Indian equity market is optimistic overall. However, investors must be on a flexible footing in the face of global concerns and refrain from being overly aggressive,” said Santosh Meena, Head of Research at Swastika Investmart.

Advising bottom finishers to maintain buy on dips strategy Sumeet Bagadia, Executive Director at Choice Broking said, “This correction was widely awaited as key benchmark indices had surged to record high. However, bottom finishers may have a good buying opportunity in this correction as 30-stock index has strong support at around 60,500 levels. We may witness strong rebound from these levels towards 63,000 mark. Similarly, Nifty has strong support at 18,000 levels and the 50-stock index may rebound from these levels towards 18,500 and 19,000 levels in near term.”

Asked about Bank Nifty pivot points Sumeet Bagadia said, “Bank Nifty is standing at support of 42,500 levels. It may bounce back from these levels and can go up to 44,000 levels in next leg of market rally.”

Stocks to buy today

On stocks to buy in current market correction Saurabh Jain of SMC Global Securities advised bottom finishers to look at banking and capital goods stocks and advised positional investors to look at Axis Bank, ICICI Bank and L&T shares.

The Bank of Japan has slightly loosened the shackles on its 10-year yield target and said it will review the operation of its yield-curve control policy, surprising financial markets and sending the yen sharply higher.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.