Tracking positive global cues, the Indian market hit a fresh high on January 21 but D-Street failed to keep the momentum going as investors preferred to book profits at higher levels.
The S&P BSE Sensex closed in the red after hitting 50,184, the first time it hit 50,000. The index ended 167 points lower at 49,624, while the Nifty50 was down 54 points at 14,590.
Sectorally, the action was seen in consumer durables, capital goods, while profit booking was visible in telecom, metals, realty, public sector and oil & gas.
Investors should not mistake the dip with a top because there is plenty of upside, considering the fact that the economy is on a strong recovery path.
“Sensex@50,000 is great news not only for the market and investors but for the economy also. Markets are barometers of the economy with the potential to discount the future. If this is true, the Indian economy is on a strong recovery path,” Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services told Moneycontrol.
If the recovery in growth and corporate earnings, currently underway in India, gathers momentum, the markets may surprise on the upside but it is important to appreciate that the market is overvalued from the short-term perspective, he said.
Vijayakumar further added that at high levels, the market is vulnerable to a correction. Investors can use the euphoria to get rid of low-grade stocks from the portfolio.
Here is what experts think that investors should do on January 22:
Ashis Biswas, Head of Technical Research at CapitalVia Global Research Limited
The market manages to hold above 14,600 (the Nifty level). Sustaining above 14,600 is the key and should attract further liquidity into the market to propel the ongoing long-term positive trend.
The market should gain momentum and extend the rally till 14,800-14,930. We observed that volatility expanded in today’s trading session but market breadth will stay positive, strengthening the view of a short-term bullish outlook
Rahul Sharma, Head – Technical & Derivatives Research, JM Financial Services
What a day for Sensex to hit 50k on the 21st Day of the 21st Year, of the 21st Century. We believe this is more of a psychological milestone though an important one.
Since booking profit is better than looking at the profit, we advise to take some profits around Nifty at 14,800-15,000 and keep portfolio’s hedged with the Nifty Put Options of February Expiry.
As a budget strategy for traders, it is best to buy the expectation and sell the realisation. Maintain a trailing stop loss of 14,440 for positional longs in the Nifty.
Chandan Taparia, Vice President | Analyst-Derivatives at Motilal Oswal Financial Services Limited
The Nifty formed an Out Side Bar on a daily scale, which indicates a volatile swing in the market that could continue in the run-up to the budget.
Now, the index has to continue to hold above 14,500 zones to extend its move towards 14,750 then 15,000 zones, while on the downside, immediate support exists at 14,450 and 14350 levels.
Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments
We witnessed nervousness around the 14,750 and the Nifty erased all its gains to close in the red. However, the trend continues to remain positive and we still have a pending target of 14,800-14,900.
Since the support of 14,300 continues to hold, a favourable risk to reward trade can be initiated with a target of 14,800 and a stop for a close below 14,300.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.