Is the market sell-off over for now? Good time to buy blue-chips

Has the recent fall in the market come to an end? That is the question market participants are asking after the late rebound on Dalal Street on Wednesday. Most analysts, who forecast market movements based on charts, believe the sell-off is more or less over as long as the Nifty stays above 8270. If the index falls below this level, it could fall to as low as 8000. But, this could be a good point to buy some of the blue-chips.

Shubham Agarwal

Head - Quantitative Research, Motilal Oswal Securities

Where are we? Nifty saw a spike, but despite the fact that the Volatility Index should have corrected signifi cantly, it remained positive with gain of a percent. The spike candle is not isolated which makes us believe that the pause within the downtrend is temporary in nature

Outlook: For a few sessions to come, we expect the Nifty to correct with a cap at 8650, post which the Index can move lower for 7980. Our ‘Global Relative Comparison’ model also indicates that the Nifty may turn as an under-performer compared to the World Equities. A swing in momentum indicators from a level of 60-65 also suggests a right tail extreme within the current distribution.

What should you do? For investors looking to use this pullback as an opportunity, we recommend buying Idea and L&T in portfolio, which is available at a bargain, and the overall trend remains up for a move up to 30%-40% from here.

Prakash Gaba

Independent technical analyst

Where are we? It is pertinent to note that the market bounced back like a dot from our supports of 8269 on March 27, 2015. The Nifty has bounced back due to short covering from a psychological support of 8300 and is also close to the 200-day moving average which is known as stone wall of an indicator.

Outlook: Technically, the trend is still intact up as long as 8270 is not violated. There is a very good chance that we may still see a sideways move in the days to come. If 8270 is violated aggressively, then a level of even 8000 is not ruled out.

What should you do? As the trend is still intact as of now, keep buying Nifty.

Dharmesh Shah

Head - Technicals, ICICI Securities

Where are we? In the entire bull run since August 2013, the Nifty has maintained a sequence of higher highs and higher lows. The overall positive price structure remains intact as long as this sequence is not disturbed. On Wednesday, the Nifty formed a Hammer candle after nearly testing its March 2015 low (8269) which also coincides with the key rising trend line in place since July 2014.

Outlook: We do not foresee the Nifty breaking 8100 level which is a key floor for the market being the confluence of the 52-week moving average and previous bullish gap area.

What should you do? The current decline should be used as a buying opportunity to ride the larger uptrend. In the current decline, investors should look for buying opportunities in banking, capital goods, cement and telecom sectors.