Stock market strategy: Where to invest as Israel war escalates, oil rises | News on Markets | shahzadsoft tech a General Blogging Website

very aged bull-run needs a healthy correction and this war-triggered correction has only escalated that, say analysts | Photo: Shutterstock

4 min read Last Updated : Oct 03 2024 | 1:43 PM IST

Stock market today, Stock market crash news: The ongoing correction in the Indian stock market may be nearing its bottom, analysts said on Thursday, as they expect the Iran-Israel war to turn into a “localised” affair over the medium-term.

At best, they expect the benchmarks — BSE Sensex and Nifty50 — to slide another 1-2 per cent here on and suggest investors use the dips to buy into quality large-caps and select mid, smallcap stocks.

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“The Middle East war may become a localised war, like the Russia-Ukraine war, with people accepting it as a ‘part of life’. We believe equity markets may remain volatile in the near-term, correcting another 1-3 per cent till Israel’s response to Iran’s missile attack is unknown,” said G Chokkalingam, founder and head of research, Equinomics Research.

The BSE Sensex, today, plummeted 1,607 points intraday, breaking the 83,000-mark in the process. The Nifty50, too, sank 514 points, giving up the 25,300-mark during the day, as Iran fired close to 200 ballistic missiles at Israeli military facilities late on Tuesday.

The BSE benchmark has tumbled 3,376 points from its record high level of 85,978 level, touched on September 27, 2024.

The Nifty50, on its part, has shed 994.6 points from its lifetime high of 26,277, touched on the same day.

In the broader markets, the Nifty MidCap100 index has fallen 1,492.5 points and the Nifty SmallCap100 index has crashed 641 points from their respective 52-week highs.

“Every aged bull-run needs a healthy correction and this war-triggered correction has only escalated that. As the markets are expected to remain jittery in the near-term, we advise investors to use this opportunity to enter quality large-caps from a long-term perspective,” said Gaurav Dua, senior vice-president, head-capital markets strategy, Sharekhan.

He advises investors to bet on pharmaceutical and fast moving consumer goods (FMCG) companies offering valuation comfort.

Oil on the boil

Brent crude price has rallied about 4 per cent since Iran’s attack late Tuesday. While this triggered a sell-off in major oil-linked stocks, such as those from the oil marketing, paints, aviation, and tyre sector, analysts believe the rise is insignificant given that the world’s top oil producing countries are engaged in a war.

That apart, Reuters reported that Organization of the Petroleum Exporting Countries (Opec) and its allied members (Opec+) left oil output policy unchanged on Wednesday, including a plan to start raising output by 180,000 barrels per day (bpd) December onwards.

“Consumption and infrastructure (cement)-related companies may feel the heat as the recent uptick in oil prices could lead to an uptick in their raw material costs. Investors, however, may use this dip to buy quality names in the space,” said Vinod Nair, head of research at Geojit Financial Services, who also prefers information technology (IT) and Pharma as a sector for the long-term.

G Chokkalingam of Equinomics Research said over-valued and ‘perception driven’ small and mid-cap stocks may test the waters for some more time.

“Thus, investors with conservative risk profiles could hold up to 15 per cent in cash and gold, half of the remaining 85 per cent in largecaps and the balance in quality SMC stocks,” he said.

From a technical viewpoint, the Nifty index is trading around its 20-day moving average (DMA) of 25,500 which, analysts said, may trigger a short-lived rebound as selling pressure at higher levels remains a risk.

“The recent high of 26,277 is likely to act as a near-term resistance, and traders are advised to adopt a ‘sell on rise’ strategy till Nifty firmly surpasses the 26,000-mark again. On the downside, key support levels to watch are 25,100 and 24,800,” said Santosh Meena, head of research, Swastika Investmart.

Long-term investors, however, may use this correction to buy large-cap stocks, where valuations have become attractive. Commodity-related stocks may perform well in the near-term, Meena added.

First Published: Oct 03 2024 | 1:33 PM IST