Stick to large-cap stocks

The period February 16-22 under review saw markets under pressure. While they were up for just one of the five sessions, they were actually sideways on two of the five days. The last day saw markets cracking on the back of a weak Dow Jones. BSE-Sensex lost 1,530.11 points or 2.50 per cent to close at 59,744.98 points, while Nifty lost 461.55 points or 2.56 per cent to close at 17,554.30 points. With this level they have broken the support levels mentioned earlier and we are likely to see markets falling further and probably finding support at the low made on budget day on the February 1.

Dow Jones had a trading holiday on Monday and gained on two of the four trading sessions and lost on the other two. The gains and losses were on alternate days with Tuesday being the bad day when markets fell sharply. Dow Jones lost 959.68 points or 2.82 per cent to close at 33,129.59 points.

Results season is over and there have been no IPOs for almost a month now. February has seen zero activity on this front. The last issue was the FPO from Adani Enterprises Limited. March is expected to be better and we could see a couple of issues tapping the markets.

The fall on Wednesday has broken the back of the markets and made rallies that much more difficult. The immediate resistance would remain at 18,265 on Nifty and at 61,400 on BSE Sensex. These levels in the current mood and scenario appear to be quite far and would require the markets to perform really well to surpass.

The week ahead sees February futures expire on Thursday. The present value of Nifty at 17,554.30 points is 337.25 points or 1.88 per cent lower for the February series. With the kind of volatility and just one trading session left, it appears that the bears have the upper hand. To expect markets to reverse sharply tomorrow, may be a tough task or almost impossible for markets. The range for the series has been big between 17,353-18,134 points with the lows being made on budget day and the budget week being the one where markets were under pressure post the Adani Enterprises subscribed FPO being withdrawn. The good part is that markets gained post budget and the lows made were not breached again. In such a scenario, expect markets to remain range bound, but volatile. The important point would be whether the budget day lows of 58,816.84 points on BSE Sensex and 17,353.40 points on Nifty are violated or act as strong support.

The trading strategy for the February 23- March 1 period would be simple and would entail buying large-cap stocks on sharp dips and selling on rallies. While after such a big fall, a pullback rally would be due, it could take a couple of days because of expiry on Thursday and the fact that global cues are currently negative. Allow the mood and sentiment to improve before venturing to buy.

(The author is the founder of

Kejriwal Research and Investment Services, an advisory firm)