Recently we have faced a lot of bad news on the macro front as well as the global front. Inspite of so much happening, Nifty is trading around 5150 today. This week, we indeed drifted below 5000 but there was buying seen that brought our markets back above 5000. I feel Nifty to find it’s base around 5000. Before we expected 5200 to be the base but the global events led us to fall below that levels. When there is panic on the global front and every equity market in the world is crashing, it is pointless to talk about which support zones will hold or not since none will. As people stop panicking and selling and shorts are covered, the markets find their bases quickly.

You will know when the markets bottom out is if they keep trading around a certain level again and again, in short they keep consolidating in that area, go higher and then fall and revisit the base levels. I have a personal feeling that 5000 on the nifty should be the base and any levels close to that or below should be used to buy into the markets. I’m hoping you have kept some cash at least on the sidelines to buy on further dips because it might come in handy if we get further bad news globally. The reason I feel 5000 on the markets should hold is because even after so many bad news we are still 3% above the 5000 levels on the nifty and thus if further bad news came, we might fall down a couple of percent and then stabilise there. If you look at the US markets, they are extremely volatile but still trading in a certain range. They fell 5% on Monday, recovered 5% on Tuesday, fell 5% again on Wednesday and gained 5% again on Thursday. Too much volatility there but the levels are still the same, this week they gained back whatever they lost. Even Warren Buffet has agreed to be bottom picking as he feels there is no recession like thing going to happen. US markets are trading around 11,000 and might find a base around that level.

When I say base around 5000 on the nifty, it does not mean we can never fall below 5000 and if it does, Im wrong. What I mean is around the 5000 mark, we should stabilise and start seeing buying around those levels. We might see Nifty dropping to 4900 or maybe 4800, but I don’t think that those levels will sustain at all and any little positive news can trigger markets back to 5000+. So in short buying around 5000 levels on the nifty is not going to be a bad idea after all. Be very picky in terms of what you are buying, make sure that the stocks you buy have less global exposure and a good earnings visibility. Avoid Realty, IT, metals and Autos. I’d personally jump onto the private banking space as that is one sector that looks very positive to me from a long term view.

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