Markets Facing Sector-Specific Action, Say Analysts
The benchmark stock indices closed higher on Tuesday, snapping a two-day decline.
There has been sector-specific action in the equity markets, but the broader markets seem to be experiencing consolidation, analysts said on Tuesday.
There is more of a sectoral rotation seen in the markets, Dharmesh Kant, head of equity research at Cholamandalam Securities Ltd., said. "Incremental highs are not made on a stock-specific basis."
Kant emphasised that high valuations are currently a major concern for the market, but a huge flow of liquidity kept the bourses high at the current levels.
On bank valuations, Kant is positive for large-cap banks. He highlighted that ICICI Bank Ltd., IndusInd Bank Ltd., Bank of Baroda and Canara Bank are attractive even at the current levels.
Markets are experiencing consolidation, according to Kunal Shah, senior technical and derivative analyst at LKP Securities Ltd.
Shah said the markets are facing sector-specific action, with broader markets consolidating. He is bullish on certain sectors, with the power segment being on top. He recommends Power Grid Corp.
"On the technical charts, Power Grid is trading in a strong uptrend," Shah said. "The stock is trading above its 20-day moving average."
He said the stock reaching Rs 300 apiece is likely on the cards very soon. "One can initiate a long position, keeping a stop loss of Rs 283 on the downside and looking for a target of Rs 300 on the upside."
The benchmark stock indices closed higher, snapping a two-day decline, as Tata Consultancy Services Ltd. and Tata Motors Ltd. led the gains. The NSE Nifty 50 settled 76.30 points, or 0.34%, higher at 22,198.35, and the S&P BSE Sensex gained 305.09 points, or 0.42%, to end at 73,095.22.
From a market perspective, investors largely stayed cautious ahead of some key US economic data, including a report on consumption expenditure and the domestic market expiry of February's series of derivative contracts due this week, according to Avdhut Bagkar, technical and derivatives analyst at StoxBox.
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