Market veteran Sushil Kedia advises caution amidst Nifty and Bank Nifty pullbacks, highlighting long-term investment horizons amidst short-term fluctuations.
Market veteran Sushil Kedia believes that the current pullback in the Nifty and Bank Nifty indices should be seen as a buying opportunity.
Kedia noted that the Nifty recently touched a strong resistance level of 23,150, a level anticipated for the past three weeks, which led to a reversal.
Kedia pointed out that market operators and retail traders may be creating an illusion of resistance at 23,150 through short-term option trading.
As for the Nifty, Kedia emphasized that until the Nifty breaks through the 23,150 level, it's premature to discuss higher targets like 24,750.
Market veteran Sushil Kedia advises caution amidst Nifty and Bank Nifty pullbacks, highlighting long-term investment horizons amidst short-term fluctuations.
Market veteran Sushil Kedia believes that the current pullback in the Nifty and Bank Nifty indices should be seen as a buying opportunity. Kedia noted that the Nifty recently touched a strong resistance level of 23,150, a level anticipated for the past three weeks, which led to a reversal. "Nifty kissed its tight resistance of 23,150, and it made a reversal behavior," he observed. The lack of strength in the index indicates a potential pullback this week, possibly dropping the Nifty by 400-500 points.
Kedia said this in an exclusive interview to Moneycontrol on May 29. The Nifty has seen a near 200 point reduction since then.
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He advised that any short-term pullbacks or hesitations may provide temporary relief for skeptics but stressed the importance of looking beyond these corrections. The upcoming exit polls on Saturday and subsequent election results are expected to significantly impact trading sentiment, leading many short-term traders to wrap up their positions by Friday. "Any hesitations, any fears, any last bangs of disbelief, the disbeliever shall find temporary happiness in a 3-4 days pullback," Kedia noted.
Kedia said that the Indian stock futures market, known for high trading volumes and risk-taking, will experience psychological pressure this week. He predicts that the reversal seen yesterday could lead to a 300-400 point correction, urging caution among traders with leveraged positions. "Perhaps the reversal that happened yesterday can lead to a 3-400 points correction," he suggested.
He humorously mentioned that navigating these short-term fluctuations requires "brains made of tungsten" or "intestines made of tungsten," emphasizing the need for caution. "We don't have tungsten in either place, so I'm avoiding taking exposures that would require an alarming response into the very short term," he quipped. Instead, he advises focusing on longer-term investment horizons of one month, three months, six months, or a year. “For traders without the "tungsten" resilience, it’s best to avoid short-term exposure and focusing on more stable, long-term strategies,” Kedia said.
"If we tolerate 400-500 points (downside) and focus on the larger trend on stocks, there's a huge amount of money to be made through the next one year," he added. Kedia pointed out that market operators and retail traders may be creating an illusion of resistance at 23,150 through short-term option trading. But he believes that focusing on the larger trend in individual stocks can yield significant returns over the next year. He said investments in mid-cap IT stocks, have the potential to rise by 30-35%.
As for the Nifty, Kedia emphasized that until the Nifty breaks through the 23,150 level, it's premature to discuss higher targets like 24,750. "Prudence will not be to talk about 24,750 until the breakout of 23,150 happens," he stated. However, he remains confident in the long-term trend towards 25,000 based on the strength of individual stock sectors such as FMCG, IT, auto, financial institutions, and major groups like Reliance and Adani, which are showing exceptional strength.
