Investing long-term? Start accumulating stocks which have been hammered 20-40%: Rahul Sharma

The Nifty 50 has given more than 18% returns so far in 2023, whereas Nifty Bank has given 11% returns and Nifty Financial Services 12% returns.

In the last three years, different segments of financial service have witnessed very different trends. Trend not in terms of business but in terms of headwinds or tailwinds. While the large private banks have stagnated, some of the small private sectors have come back into the limelight. PSU banks as a pack have made a comeback, insurance companies are still searching for direction, asset management companies have been able to get their mojo back while NBFC are facing new challenges in terms of higher provisions to regulatory. So,each to own it probably defines when it comes head or tailwinds. But what is the common factor is that most of these have a high FPI holding. Now FPIs have largely been the seller in the Indian markets, occasionally they have made a comeback for a short period of time. At this point of time, they are neither major buyers or sellers, but this equilibrium will change. When that happens, it is this set of 20 stocks which will signal which way the wind is blowing for which segment.

After a minor correction, markets are once again on roll. This time the upward movement has been led by IT stock. When it comes to nifty and sensex, it is dominated by IT and financial services. So as the financial services stocks take a breather, a sectoral turn is taking place and the nifty is moving upward. Now because IT stocks have come into focus after a gap of two years, it needs to be watched how much they are able to push the market. While the party continues on the street, it would be better for investors to focus on what is happening to the individual stocks they own and how the operating matrix of that sector is shaping up. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

In this hype, many retail investors are rushing into the market. They may be influenced by the euphoria of Nifty at all-time highs and fear of missing out. However, in this rush to participate and benefit from the markets they are ignoring the risks associated with it. Risk is inseparable from the world of investing.

Investors are advised to adopt a cautious approach due to uncertainties in the financial markets. Nifty and Bank Nifty experienced a correction, along with global markets, as concerns over the Israel-Hamas crisis and US Fed Chairman Powell's speech weighed on the markets. Next week, investors will watch out for the US Fed Chairman's speech, ECB rate decision, US GDP estimates, and the quarterly earnings of major companies. Midcap and small-cap stocks have performed well, but investors should be selective and consider booking profits. Volatility may increase in the future.

International Business News: The swift closure of Silicon Valley Bank on Friday, followed by Signature Bank days later, forced US authorities to immediately pledge support for oth

“For one week or so, probably the market could be range-bound or and there is scope for some profit booking at this point. So, I am not very bullish, although the trend is going up but with less momentum. So there is some scope for profit booking. I do not see a lot of upside at this moment. I would be a little neutral at this point in time.”

A large number of times whenever there had been a correction in the nifty, especially due to any specific sector like IT stocks coming under pressure it was financial service stocks including banks which have been able to help the nifty recover. In this phase of correction, some financial services sector stocks are also under pressure, though not very high. Will they be again coming to rescue of nifty or not ? We take a look at what analysts are saying for all the financial service stocks which are part of the Nifty financial services index.

In terms of sectoral indices, banking stocks continued to witness a bearish tone. BSE Bankex dipped by nearly 383 points, while Bank Nifty shed nearly 360 points..In the broader markets, smallcap indices outperformed however the upside was capped due to broad-based selling pressure.

Relative comfort on valuation is to be found in large caps in sectors such as BFSI, pharma and healthcare over a one-year horizon, says Vetri Subramaniam, CIO at UTI AMC.