After the collapse for a subsequent 5-day long stretch, the fall of the markets have been arrested, mainly due to reasons pertaining to the maintained stance of Credit Suisse for India at 10%, buoyed by the nation’s economic recovery and falling inflation, and the Union Government tabling the Goods and Service Tax Bill (GST) in the parliament. Because of the above mentioned reasons, the market has been able to sustain its vital support of 8240, from where it bounced back sharply to close in the positive territory. Markets are not out of the woods, as there is an overhang of weak monsoons, corporate results, and uncertain global markets, and geopolitical conditions. All this will keep the markets jittery and volatile. In the absolute near term, a dead-cat bounce is quite possible, and Nifty would attempt to test 8500 to 8600 levels on an initial basis and in a better case scenario, it may attempt to test 8700.
However, due to high vulnerability, any major bad news can bring down the markets sharply and in event of Nifty closing below 8240, would prove catastrophic and sizeable downside in the market can be witnessed. So in the near term, market at best can be range bound or drift downwards. Investors should remain cautious and wary about the markets, and it is advisable to exit weak and under performing stocks in the rally. The longer term investors can use sharp declines in the market to buy selected stocks in sectors like Capital goods, Healthcare, Oil and Gas, and Infrastructure.
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