The Nifty50, India's market benchmark, has surged threefold from its Covid low of 7,511 in March 2020, signaling a robust bull market with potential for further growth. However, investors are being advised to exercise caution as the journey ahead may not be smooth, and sharp corrections are anticipated due to elevated valuations, warns V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
While geopolitical developments often serve as triggers for market corrections, recent events like the Israel-Gaza war and ongoing skirmishes in the Red Sea have not significantly impacted crude prices or markets. Vijayakumar suggests keeping an eye on events in the Red Sea, as there may be concerns of the conflict widening in the near term.
Despite potential market volatility, large-caps in banking, IT, and Reliance Industries Limited (RIL) are expected to exhibit resilience even in a downturn. Vijayakumar advises investors to consider booking some profits and reallocating funds to fixed income, where returns are attractive.
Deepak Jasani, Head of Retail Research at HDFC Securities, notes that Asian shares dropped to a one-month low, with US stock futures falling, as central bankers' hawkish remarks tempered expectations for interest rate cuts. European stocks and bonds retreated after European Central Bank officials downplayed expectations for rapid rate cuts, impacting economic growth and corporate profits.
On the economic front, India's trade deficit narrowed in December, with exports rising by 1% to $38.45 billion, and imports falling by 4.9% to $58.25 billion. The trade gap reduced to $19.8 billion compared to $20.6 billion in November. The BSE Sensex is currently up 80 points at 73,408, with positive movements in stocks like Titan, L&T, Tata Motors, and Maruti, while IT stocks like HCL Tech and Wipro are experiencing declines.
(With Agency Inputs)
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