Nifty Financial Services index stocks: Will they lead the correction once again?

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.

Even during the period of correction in nifty and sensex, mid-caps are still a part of the ongoing party on the street. On days of any recovery, mid-cap indices are amongst the recovery. Stocks from sectors like Small private banks, cement and real estate. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

After touching a new high, nifty and sensex moved into correction mode. If one looks at the way markets have moved intraday in this phase of correction, it appears that a basket selling pushes the index down then there is one sector which pushes it back up. These are indications that in the coming two weeks, when there is a high probability of volumes being low in the markets, we may see slightly higher volatility as stock prices will react more to even slightly a bit of selling or buying. In such times it would be better to stay with stocks where analysts' outlook has improved over the last one month. 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.

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.

For most, market movement this week may not appear volatile, but the fact is last week was pretty much very volatile both at the index and market breadth level. First three days of decline and then two days of up move. But the underlying bias of the market is still bearish as even when the Nifty was trading in green, the market breadth was not very positive. So it would be better to be selectively bullish and put more checks and balances both in terms of quantitative and qualitative parameters while looking at stocks.

Foreign portfolio investors (FPIs) continue to remain net buyers at Rs 221.85 crore on Thursday. DIIs, on the other hand, sold shares worth Rs 273 crore.

However if one looks at the history of financial markets, there are phases where multiple challenges have come up for the sector at the sametime. But given the savings matrix which Indian’s have, despite all that may have happened, on an overall basis the financial services industry has grown and some select stocks have given decent returns to their shareholders.

While some of the uncertainties which the global equity markets were facing have come down with indication by US fed that interest rates are not likely to inch upward. The valuation risk still remains, it would better to stay focussed on stocks where analyst score have gone up due to one or the other reasons. 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.