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Defensives like IT & FMCG might fall out of favour


By Anand James

Where we are: Ideally, volatility favours traders, but Feb’s volatility was not consistent enough for traders’ liking with swinging from 19.9775 to 11.7. Situation changed markedly along almost all those fronts by the end of February, showing signs of a strong upswing, which infact has been playing out in the first half of March, taking Nifty close to 11500 on Friday.

What is in store: Midcap index which had fallen over 26% from the Jan 2018 peak has bounced nearly 12% from the February lows, bringing in cheer to the broader market. Ideally, Nifty should soar above 12k. The extended period of consolidation since October 2018, the breakaway rallies of March, on clearing 11k, the bullish candlestick patterns that have followed are all pointing towards that end. Nifty VIX, a measure of volatility has also been steady around 15, pointing towards investor confidence in near term uptrend prospects. Meanwhile, 11670 holds potential of posing a challenge to upsides.

What you could do: In the broader market, the pace of up moves may be expected to slow down at some point in the next two weeks, as FY draws to a close. However, with strong FII inflows, it would be prudent to stay with the uptrend. Further, with risk appetite improving, some of the defensives like IT & FMCG might fall out of stock investors’ favour. It may be better to play these segments on the option side.

The author is chief market strategist, Geojit Financial Services.

Source: Economic Times