After three consecutive sessions of strong gains, the Nifty witnessed a sharp pullback, but the underlying tone of the market remained relatively stable, with no signs of aggressive selling at lower levels. According to Rahul Sharma, JM Financial Services, the way the market handled the gap-down opening was encouraging, as it did not trigger fresh selling pressure. “Looking at the way the gap down has been handled today, we have not seen big fresh sell orders coming at lower prices in the Nifty. What we saw over the last three days was a typical bear market rally.” The recent 800-point rebound in the Nifty over three sessions, he explained, was more of a technical bounce rather than a structural shift in trend.
Despite the volatility, a couple of indicators offered some comfort to investors. Sharma pointed out that the India VIX has not surged to new highs even after the sharp gap-down, which indicates that fear levels are not escalating significantly. “One silver lining over here is India VIX, which has not gone on to hit a new high in spite of the big gap down that we saw today.” He also noted that banking stocks, particularly Bank Nifty, showed resilience despite concerns surrounding HDFC Bank after overnight developments. “Even banks, especially because of the overnight news in HDFC Bank, Bank Nifty was supposed to be the bigger casualty, but that has not happened.” In fact, he added that Bank Nifty has been relatively stronger post opening, hinting at a possible recovery toward the close. “Bank Nifty is relatively doing well after the gap-down opening, which means that towards the end of the session we could see a recovery happening in Nifty as well.”
From a broader perspective, Sharma believes the current phase presents a tactical buying opportunity, especially for investors with a slightly longer horizon. “If we zoom out a bit, we feel that this is a good opportunity to buy on the dip.” He emphasized that his team has been recommending clients to accumulate Nifty ETFs during volatile phases. “We have recommended our clients to get into Nifty ETFs. We feel that this is a good time to buy ETFs, accumulate them on volatile days like such.” While geopolitical uncertainties continue to loom, he suggested that much of the negative news flow is already priced into the markets unless there is a fresh escalation. “As far as markets are concerned, with the given set of variables, we feel that most of the negatives are factored in and unless there is no fresh escalation after yesterday night’s tweet by Trump, markets would come back to where they were a few hours back.”
On the technical front, Sharma highlighted key levels to watch, indicating that 23,800 could act as an immediate retest zone, while a close above 24,000 would signal stronger recovery. “23,800 is where we know it could be a retest and once we close above 24,000, we could very well be out of the woods.” He also advised caution for traders looking to initiate fresh short positions at current levels. “Around 23,200 the risk-reward is not favourable for fresh shorts and the best thing to do at this point in time is get into ETFs.”
On stock-specific ideas, Sharma expressed a strong bullish view on ONGC, citing rising oil prices and a favorable technical setup. “Our high conviction recommendation today is ONGC. Oil prices are boiling. ONGC should benefit from this and ONGC technical setup is also very good.” He suggested buying the stock around current levels for a positional target. “Around 269, one can look to buy this stock for a positional target of Rs 300 on the upside in the next 15-20 trading sessions. Stop loss can be placed at 258.” He also highlighted strength in the power sector, particularly Tata Power, which has held up well despite broader market weakness. “On the power sector, Tata Power is something that we like. In spite of the broader market fall, we are not seeing any correction in power stocks.” He expects short-term upside in the stock. “Tata Power is another stock which can be looked upon for upside of around 5% to 6% in the very short term.”
