Nifty approaches key support zone
While benchmark indices have seen pressure in recent days, Srivastava believes the market is approaching an important technical support area that could potentially mark the end of the current correction phase.
“So, from the bottom we made in April, which was at 22,182, and then we ended up at the top near 24,601 in April, and we take a 61% retracement from that, we get a level near 23,077. So, I think, this becomes the final key support for the decline which still runs from 10 to 80. The downside but it also means when We think we’ll have to wait before we can really make any kind of inroads, but once we’ve completed this sale, we’re likely to be patient.
The assessment suggests that while some near-term weakness cannot be ruled out, the broader risk-reward equation may gradually shift in favor of investors willing to wait for confirmation of a market turnaround.
Banking emerges as the preferred bet
Among sectors, banking appears to be one of the strongest candidates for new investment ideas during the current market downturn. Srivastava highlighted the significant divergence between the benchmark Nifty and the Bank Nifty, indicating relative resilience in financial stocks.
“As a sector, it’s something that we avoid most of the year, and I’m not positive on it for a long time. So, IT is not a sector that I recommend anytime until the worst, very definitely, is over. I think banking is a good place to be. Actually, there is an interesting difference between banking and Nifty, where banks have reduced Nifty, where it’s not already low. So, there is a kind of positive difference between the two, so, banking is a segment. As comes where we will definitely look for buying ideas in this dip.”
The comments suggest that investors looking for relative strength amid market volatility may find banking stocks better positioned than some other sectors.
Energy and metals gain momentum
Beyond financials, Srivastava sees merit in sectors that are benefiting from improving commodity trends and strong underlying demand dynamics.
“Other sectors that may be of interest can go back to the energy sector, which has been doing very well, and also metals. People can often miss that you’re seeing a strong rally in metals, but also in metal prices. Overnight, you’ve seen copper, zinc, nickel, everything go up, and that could result in extended gains in the metals sector as well.”
A rise in industrial metal prices globally has strengthened the outlook for metal producers, potentially extending the sector’s recent outperformance.
Auto is still in consolidation mode
While the automobile sector is an important part of the broader market story, Srivastava believes the segment may need more time before a decisive uptrend emerges.
“Well, autos seem to be consolidating. The real big kick for autos will come when we actually get a turn in the interest-rate cycle. They can still do well. Some segments of the two-wheeler pack have outperformed, as you’ve seen a very strong rally among passenger vehicles from Tata Motors, so that’s happening for other boards, so that’s not happening either. To consolidate and lift stocks, So, we will be a little slow in picking up on the auto side.”
This view suggests that while pockets of strength exist, investors may need to be selective rather than expecting a broad-based rally across the auto universe.
Pharma’s long-term breakout remains intact
The most constructive sectoral view offered by Srivastava was for pharmaceuticals. He pointed to a significant technical breakout in the Nifty Pharma index that could support sustained gains over the medium to long term.
“Yes, the pharma index is on a very strong footing if I take a bit of a long-term view. We have broken beyond 23,500 on the Nifty pharma index; that was a breakout of the two-year consolidation. Now, it’s just pulling back to support there, and once that happens, we should be moving towards a 0-3-0 plus index. One-, one-and-a-half year time horizon kind of.”
As markets navigate a period of correction and uncertainty, Srivastava’s estimate suggests that much of the downside may already be behind investors. Caution remains imperative in the near term, while sectors such as banking, metals, energy and pharmaceuticals appear better positioned for the next phase of market leadership. At the same time, IT is a sector to avoid until clear signs of recovery emerge, while autos may need more patience before making a broad-based return.
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