Bears paint market red: Time to balance your portfolio

Mumbai (The Uttam Hindu): Indian benchmark indices declined 5 per cent this week amid global selloff, mainly triggered by the US Federal Reserve's caution approach for rate cuts next year, which resulted in relentless selling by the foreign institutional investors (FIIs). With this, Sensex lost over 1,000 points in three out of five trading sessions this week, and nearly Rs 17 lakh crore worth of market cap was eroded out of BSE-listed firms. According to market experts, it had been a dreadful week for the equity markets, as the key indices fell dramatically, erasing the gains of the last four weeks. “The benchmark index experienced a significant decline, plummeting approximately 1,200 points from the previous week's closing figure. As a result, it finished the week below 200 simple moving average (SMA), marking a total loss of nearly 5 per cent,” said Osho Krishnan from Angel One. The Nifty50 experienced a significant decline, as it breached all essential support levels. This downward movement has led the index to approach its most recent swing low, signalling potential volatility in the market. From a technical standpoint, as Nifty slipped below the pivotal zone of 200 SMA, the next potential support could be seen around the recent swing low around 23,200-23,100, while a decisive breach is likely to open further downside towards 22,800 in the near period, said Krishnan. The weak global cues initiated the downward move, but the follow-up sell-off showcases the bears' eagerness to colour the market red ahead of Christmas. On Friday, Sensex settled at 78,041.59, down by 1,176.46 points or 1.49 per cent, and Nifty ended at 23,587.50, down by 364.20 points, or 1.52 per cent. Nifty Bank ended at 50,759.20, down by 816.50 points, or 1.58 per cent. The Nifty Midcap 100 index closed at 56,906.75 at the end of trading after dropping 1,649.50 points, or 2.82 per cent.

On the sectoral front, selling was seen in Nifty's Auto, IT, Fin Services, Pharma, FMCG, Metal, Media, Energy, Private Bank, Infra, Commodities, and PSE sectors. Considering the recent developments, it is advised to approach markets with proper risk management and refrain from taking complacent bets for the time being, advised experts. Amid this cautious environment, “we maintain a bullish outlook on new-age, platform-based technology companies,” said Krishna Appala from Capitalmind Research. A balanced investment strategy that combines the stability and fair valuations of large caps with tactical exposure to profitable, domestic-focused tech companies offers a prudent approach to capturing growth potential while managing geopolitical and policy risks, said experts.