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'14,382-14,432 is the crucial support band for the Nifty in the near term.' Photo: Ramesh Pathania/Mint
'14,382-14,432 is the crucial support band for the Nifty in the near term.' Photo: Ramesh Pathania/Mint

Use dips in stock market to add quality names to your portfolio, say analysts

Analysts believe with this kind of roller coaster markets, it is not going to be an easy way for traders

In a volatile trading session, the benchmark indices swung both ways before ending the session on a flat note on Wednesday. The Nifty index opened with healthy gains but profit-taking at higher levels gradually dragged the indices lower. However, healthy buying in banking stocks in the last hour helped the indices to pare all the intraday losses. Consequently, the Nifty index ended flat at 14,555 levels. Analysts expect stock markets to remain volatile in the near future on account of earnings announcement.

"Markets will react to the IT majors, Infosys and Wipro, results in early trade of Thursday. And, we expect stock-specific volatility to remain high on account of earnings announcement so participants should prefer hedged positions instead of outrights. Amid all, vaccine development in India and globally would be actively tracked for cues," says Ajit Mishra, VP - Research, Religare Broking.

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Infosys Ltd and Wipro Ltd reported soaring quarterly sales and profit, beating analysts' estimates on all fronts. Infosys's December-quarter profit rose 16.6% to 5,197 crore from a year ago, while revenue grew 12.3% to 25,927 crore, showing strength across sectors, including financial services, high tech and manufacturing.

Wipro also reported a nearly 21% increase in profit to 2,967 crore. Revenue rose 1.3% from a year ago to 15,670 crore. In dollar terms, revenue grew 3.9% to $2.07 billion from the preceding three months.

With markets at a record high, Mishra feels the prudent approach is to use dips to add quality names.

Analysts believe with this kind of markets, it is not going to be an easy way for traders.

"Risks of sharp and sudden selloffs at high levels remain. One needs to be careful and keep long positions under control and keep taking profits on trading and some investment positions. 14,382-14,432 is the crucial support band for the Nifty in the near term," says Deepak Jasani, Head of Retail Research, HDFC Securities.

The broader markets on Wednesday underperformed as both midcap and smallcap ended with losses of 0.7% and 0.5%. A mixed trend was witnessed on sectoral front wherein, Telecom, Auto and Banking were the top gainers whereas Consumer Durables, Healthcare and Realty ended with losses.

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