According to V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the recent year-end surge that propelled the Nifty by approximately 14% from its October 2023 lows seems to be losing momentum gradually.
One of the primary challenges affecting this rally is emerging from the US market, which exhibits signs of weakening. The focal concern revolves around uncertainties regarding the anticipated rate cut in March, primarily due to the persistent tightness in the labor market and lower-than-expected unemployment figures.
Despite indications of controlled inflation, suggesting the conclusion of the rate-hiking cycle and an imminent pivot by the Fed, the market could face disappointment if the expected rate cut in March fails to materialize. This potential shift is reflected in the recent uptick of the 10-year US bond yield, surpassing 4%.
While the enthusiasm among retail investors could buoy the already buoyant broader market, the possibility of profit booking by DIIs combined with the traditionally weaker performance of markets in January might impact the ongoing rally.
Vijayakumar advises long-term investors to consider utilizing market dips as opportunities to invest in high-quality banking stocks that are currently reasonably priced.
On Monday, the BSE Sensex experienced a decline of 213 points, resting at 71,812 points. Notably, FMCG stocks, including HUL, marked a 1.5% decrease, while Marico observed a 4% dip and Godrej Consumer recorded a drop exceeding 3%.
(With Agency Inputs)
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