Continued buying in private bank stocks may stabilise market: Kunal Bothra

The month gone by was very forgettable, the worst series that we have seen since October 2008. There is a bit of recovery as well that kicked in on the benchmarks in the latter part of the week. What’s your assessment of the market in the week gone by?

It was a forgettable month. The kind of price damage over the last few days of this series and especially what transpired last Friday as well, it is something quite interesting. It is only then that we saw a proper recovery in many of the stocks, many of the sectors; the market finally witnessed a bit of a bounce which was much due and much anticipated. Now, we are at a point where the global markets and Dow Jones particularly has recovered almost 50%. We could come back to that 9,000-9,500 kind of a zone which is very close to that 50 % kind of retracement from the highs and the lows that we have seen in the last expiry. In that regard, we are moving more or less in tandem with the global markets.

Now, in the last few days of this week, there was a good amount of short covering which transpired into many of the high beta pockets and then there was a steady buying which happened into private sector banks. This, I believe, is a trend to watch out for because if there is any consistent buying into the banking stocks and especially in the private sector banks such as HDFC Bank and ICICI Bank, then we could be in for more stability going ahead. Also, the volatility index finally cooled off a bit; from those 85-ish levels, we ended the week very close to 70. If that is the trajectory we could carry forward into the next week, then the volatility for our markets would also drop down significantly and this could lead to potentially more stability in our market.

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