The market has seen a strong boom in 2021. This boom has been widespread. In which mid and smallcap stocks have outperformed the giants. However, for the last about 1 month, pressure is being seen on small-medium stocks. After this rise, the market is showing sluggishness for the last two consecutive days. Yesterday also the market closed in the red mark. The question is, what does this fall of the market say now? Has the bullish phase passed or has the risk increased in the stock market now. Here we are trying to find answers to these questions.
Joining us on today’s quest are Sanjay Sinha, Founder, Citrus Advisors, Gurmeet Chadha, Co-Founder and CEO of Complete Circle Consultants, Ashish Somaiya, CEO of White Oak Capital Management, and Prakash Dewan, Investment Evangelist.
Let’s first take a look at the movement of the market so far.
If we look at the movement of the index in the last 3 months, Sensex has given a return of 11.8 percent while Nifty has given a return of 10.4 percent. On the other hand, Nifty Bank has given a return of only 5.3 percent. Nifty Midcap 100 has given 8.3 per cent and Nifty Smallcap 250 has given 10.4 per cent. Whereas Nifty Pharma has given a negative return of 1.9 percent in the same period.
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Similarly, if you look at the market movement of the last 1 month, Sensex has given a return of 6.1 percent and Nifty 5.3 percent in 1 month while Nifty Bank has given a return of 2 percent in the last 1 month. Nifty Midcap 100 has given 0.3 per cent return while Nifty Small Cap 250 has given 3.6 per cent and Nifty Pharma has given negative return of 5.4 per cent.
Activity of FIIs
Talking about the activities of FIIs in the market, in the last 4 months, FIIs have been net sellers while in August they have become net buyers. Foreign institutional investors bought Rs 39880 crore in the Indian market in the financial year 2019, while in 2020 Rs 64379 crore and in 2021 Rs 11810 crore.
5 positives in the market
Lower interest rates, lower corporate tax, GST normalization, PLI schemes and continued flow of FIIs/DIIs are the 5 positive factors that are supporting the market.
5 negatives in the market
Overvaluation, fear of rising inflation, fear of rate hike from US Fed, increased concern over growth and delta variant of Corona are the 5 factors that remain a hanging sword on the market.
earnings of companies
Looking at the results of the companies in the first quarter, it also seems to be supporting the market. So far, the profit growth of 2227 companies has been positive while the profit growth of 908 companies has been negative. At the same time, the profit growth of 68 companies has been neutral. In the first quarter, the average revenue growth for companies has been 48 percent while the average EBITDA growth has been at 32 percent.
Experts say that since the market has seen a steady rise. So now it needs some rest or recovery of profits. After some consolidation, we will see the market rally again. In view of this, it is advisable to buy at lower levels in the market. One thing is for sure that from here we will see an increase in select quality stocks. Keeping this in mind, choose quality stocks for good returns.
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