Don’t Sell Stocks at All-Time Highs: VK Vijayakumar, Geojit Financial

NEW DELHI: Amid a volatile move in the market, especially given a number of headwinds including inflation and rising interest rates, traders are keen to limit losses. In addition, the accelerating earnings season could increase volatility. However, some analysts believe that the decline will be limited in the market, even if we see some selling.

“Nifty is unlikely to break below 17,300. Bottom buying is likely to support the market. Financials have the potential to support the market,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Over the past month, the market has seen consolidation. It moved within a narrow 1,000 point range between 17,000 and 18,000, yielding around 1% over the period. Massive sales by foreign investors have been another reason behind this.

“The market weakened due to negative signals from global markets and the resumption of REIT sales. Rising US inflation, which hit 8.5% in March, and the increasingly hawkish Fed are headwinds for markets. FIIs that were buyers in early April became sellers again which impacted sentiment,” Vijaykumar said.

“In addition, the downward revision of RBI growth to 7.2% for FY23 from 7.8% earlier and the upward revision of inflation to 5.7% from 4.5 % earlier moderated expectations a bit.”

But it’s not that there aren’t opportunities to make money in the market. There are many sectors and segments that could offer good buying opportunities in the future.

“There have been profit bookings in IT stocks, which have driven down their valuations. Thus, further sales of IT stocks will be moderate. The results of financials, especially big banks, will be good and they can give resilience to the market,” Vijaykumar said.

He added that mid and small caps have outperformed large caps and this trend is expected to continue. “Retail investors are aggressively buying small and mid caps. It is important to note that there is no REIT selling pressure in this segment.

Speaking of Bharat Dynamics which has seen heavy buying in recent sessions, Vijaykumar attributed the war to the rally. “The war in Ukraine has positive consequences for defense equipment manufacturers. BDL is India’s leading manufacturer of missiles – surface-to-air missiles and anti-tank missiles. The United States and the West are supplying these missiles to Ukraine and the demand for these weapons has increased.

He also said that even though stocks like JSW Steel, BEL, HAL, AU Small Finance Bank, Varun Beverages, Poonawala Fincorp and Deepak Fetilisers are trading at all-time highs, you shouldn’t take profits there.

“It’s not a good strategy to sell stocks hitting new highs, just as it doesn’t make sense to buy stocks hitting new lows. Ride the winners,” he said.

Garland K. Long