Focus on picking fundamentally strong scrips for long-term growth

Spooked by the uncertainty on Trump’s tariff policies & rumours of reciprocal tariffs on India also, mixed corporate earnings, unabated FII selling and rupee depreciation against the dollar; the Indian market snapped two-week winning streak and posted biggest weekly losses in two months during the week ended. BSE Sensex shed 1,920.98 points or 2.46 percent to close at 75,939.21, while NSE Nifty fell 630.67 points or 2.67 per cent to end at 22,929.25. Amidst ‘panic’ triggered by sharp cuts in several mid-cap and small-cap stocks, the broader market underperformed benchmark indices by a wide margin. It is pertinent to observe that India’s market capitalization (mcap) has dropped below the $4-trillion mark for the first time in over 14 months, driven by a weakening rupee and a declining stock market. India’s total market cap now stands at $3.99 trillion—its lowest since December 4, 2023—down from a peak of $5.14 trillion in mid-December, marking a staggering $1 trillion erosion. Indian rupee weakened nearly 1.5 percent against US dollar year to date, second worst currency in Asia after Indonesian Rupiah. Contrary to the consensus, market veterans feel that the reciprocal tariffs on India, if imposed by the US, are unlikely to hurt a majority of Indian industries. As long as agricultural sectors aren’t harmed, lowering tariffs makes sense say some observers. Sectors like financial services and consumer are predominantly safe from any adverse implications of US reciprocal tariffs. Present correction actually is a very good correction in an otherwise long-term bull market that India is in say market players. Use the current downtrend to pick efficient market leaders in sectors with strong pricing power, such as telecom and cement. These sectors look attractive due to consolidation and pricing potential.

F&O / SECTOR WATCH

The recent shifts in global policies, especially those emerging from the US, are invoking a sense of uncertainty among the FIIs, which in turn is reshaping their investment strategies in dynamic markets like India. Continuous FII selling weighed down the broader indices. Nifty and Bank Nifty dropped over 2.5 per cent and two per cent, respectively, on a weekly basis. In the options market, prominent Call Open Interest for Nifty was seen at the 23,300 and 23,500 strikes, while the notable Put Open Interest was at the 22,800 and 22,500 strikes. For Bank Nifty, the prominent Call Open Interest was seen at the 49,500 and 50,000 strikes, whereas notable Put Open Interest at the 49,000 strike. Implied Volatility (IV) for Nifty’s Call options settled at 13.72 per cent, while Put options conclude at 14.03 per cent. The India VIX, a key market volatility indicator, closed the week at 14.96 per cent.

(The author is a senior maket analyst and former vice- chairman, Andhra Pradesh State Planning Board)