CA Rudramurthy BV, the Managing Director of Vachana Investments, advises investors to avoid mid and small-cap stocks, especially in the SME and IPO areas, until prices stabilize. He stresses the importance of being cautious and protecting your investments during this time.
Market Correction Expectations By CA Rudramurthy BV
CA Rudramurthy BV expects a price correction of no more than 3% to 5%, but notes that the overall market might experience larger corrections before reaching more comfortable valuation levels. After a 100-point increase on Friday, the markets have dropped by about 100 points since then.
On the technical side, he believes that the market has had a solid rally over the medium to long term and will likely see some necessary corrections, which he views as healthy for future performance.
CA Rudramurthy BV thinks both the Nifty and Bank Nifty might correct by 3% to 5% from their current levels, with strong support at around 24,000 for the Nifty and 49,500 for the Bank Nifty. These levels could present good buying opportunities for investors.
Staying Invested Amid Volatility
Despite concerns about geopolitical issues and rising crude oil prices, CA Rudramurthy BV emphasizes the need to stay invested. He advises against short-term trading during this volatile time and encourages investors to hold their positions.
By staying the course, investors can take advantage of better prices when the market rebounds.
Support Levels and Market Adjustments
CA Rudramurthy BV points out that the anticipated support around the 24,000 level for the Nifty means there could be a 750-point drop, which is just a 3% correction based on current prices.
Given the significant rally this year, with the Bank Nifty increasing over 20%, he believes this correction will ultimately benefit investors in the long run. Although foreign institutional investors (FIIs) have sold off about ₹75,000 crore, he notes that the market has only seen a 5% to 6% correction so far, suggesting that more time-based adjustments are likely.
Promising Sectors to Invest In
When it comes to specific sectors, CA Rudramurthy BV is particularly positive about private banks. He plans to buy private bank stocks if the Nifty hits around 24,000, with HDFC Bank as his top choice, followed by ICICI Bank, Axis Bank, and Kotak Mahindra Bank. CA Rudramurthy BV believes private banks offer good value right now.
In addition to private banks, he sees potential in the IT sector, suggesting that stocks like Wipro, TCS, and Infosys could do well in the future, even though they haven’t performed strongly in recent years.
CA Rudramurthy BV also recommends looking at the pharmaceutical sector, with stocks like Dr. Reddy’s, Sun Pharma, Divi’s Lab, and Biocon being good options.
Conclusion: Top Sectors for the Coming Year
To sum up, CA Rudramurthy BV’s top three sectors to watch over the next year are private banks, IT, and pharmaceuticals. He also suggests SBI from the PSU banking sector and highlights Mahindra & Mahindra and Maruti as his top picks in the automobile sector. Investors should stay selective and focus on specific stocks within these sectors.
