Don't buy this dip, wait for the next one, says CA Rudramurthy BV

The Indian market's sharp recovery from last week's lows has been impressive. But CA Rudramurthy BV, MD of Vachana Investments, is pumping the brakes on fresh buying, not because he's turned bearish, but because the risk-reward simply doesn't add up anymore.

"After a 1,000-point move, buying fresh longs in the index right now is not a good risk-reward trade," he told ET Now. "I will wait for a dip and look at entry closer to 23,800."

Where Nifty stands right now

Rudramurthy had called the gap-down open around 23,000 last week as a buy signal, and it played out exactly as predicted. Now, with Nifty sitting in a tight zone between support at 23,800 and resistance at 24,300, he sees the index stuck in no-man's land.

Neither a breakout nor a breakdown looks imminent. Adding to the caution: Bank Nifty has started underperforming Nifty over the last two to three sessions — a subtle but important warning sign that momentum is fading at the top.

His playbook for traders: if positive news over the weekend triggers a gap-up open on Monday, use it to book profits rather than add positions. Then wait for Tuesday or Wednesday's likely dip as the next real entry opportunity on the long side. Bank Nifty support sits at 57,000, resistance at 58,000, a similarly tight band.

On IT stocks: Don't catch a falling knife

The Accenture-led selloff has many investors eyeing Indian IT stocks as bargains. Rudramurthy has a clear, firm message for them: don't.

"People have been calling IT valuations cheap for a long time -and you would have lost enough money buying on that cheap valuation," he said bluntly.

His argument cuts through the usual comfort of blue-chip names like TCS and Infosys. Yes, they are great companies. But when AI is fundamentally restructuring the business model of an entire industry, valuation alone is not a margin of safety. The knife is still falling.

"I would rather buy higher with clarity than try to catch a falling knife and see further cuts," he said. "IT is the number one sector to avoid."

For Rudramurthy, the right time to buy is when you have a great business, a clear recovery in fundamentals, and valuation comfort - all three together. Right now, IT has only one of the three.

Two stock picks for the patient trader

While the index and IT are both off the menu, Rudramurthy highlighted two names with strong technical setups worth watching.

NBCC is his high-conviction call. The stock has formed a classic rounding bottom, taken solid support in the 100–105 zone, and is now breaking out above 110 even as the broader market wobbles, a sign of genuine relative strength backed by delivery volumes and positive open interest buildup. He sets initial targets of 135 and then 150, with a longer-term view of 180–200. Stop loss on a closing basis: 105.

Eternal is his second pick. After an extended consolidation phase and strong support around 230–240, the stock is attempting a breakout above the 260 level. A clean break above that triggers targets of 285 and eventually 300. Stop loss: 245.

Both calls come with the same underlying message -be stock-specific, wait for Monday's likely gap-up to trim existing positions, and use next week's mid-week dip to build fresh longs.

The market isn't bearish. It's just not cheap anymore.