Expert view: Rohit Srivastava, the founder and market strategist at Indiacharts.com, believes the market may have begun a move that could eventually take it back to record levels. He, however, added that a fall below 24,300 could signals short term weakness. In an interview with Mint, Srivastava decoded the current market structure and also shared his views on the banking and IT sectors. Edited excerpts:
This is a slightly challenging phase for investors, especially because the news flow remains extremely negative. However, towards the end of March, we witnessed signs of capitulation in stocks.
During the bottoming-out process, the broader market began to outperform the Nifty. This suggests that large-cap stocks fell more sharply, while mid- and small-caps showed relative resilience. In fact, the broader market had largely stopped falling, and since then, buying interest has continued.
What we are seeing now is an early-stage trend reversal—from a downtrend to an uptrend. That said, such transitions are never smooth. The initial phase of recovery is often accompanied by persistent negative news flow, and geopolitical risks are still not fully behind us.
For investors, this is a constructive phase to gradually accumulate quality stocks. Periods of negative sentiment often create opportunities to buy at lower levels. However, near-term setbacks cannot be ruled out due to lingering effects of the war.
For traders, the focus should be on short-term sentiment indicators. For instance, if the Nifty breaks below 24,300, it could signal short-term weakness, opening up trading opportunities on the downside. That said, since the broader trend appears to be turning upward, the emphasis should gradually shift towards long positions rather than short trades.
In fact, a large part of the bear phase likely ended in March. Investors should begin to adopt a slightly more positive mindset, even if the news flow remains negative.
I would not rule out a move towards all-time highs. The key question is timing—whether it happens over the next three months or six months.
It appears that the market has already begun a move that could eventually take it back to record levels. As geopolitical risks start to recede, governments globally are likely to step in with supportive measures to revive economic growth.
That said, the after-effects of the war—such as supply disruptions and inflation—will need to be managed. Policy support will be crucial in ensuring these risks do not derail growth. Once that happens, investor confidence should improve significantly.
Bank Nifty had been a laggard earlier, particularly in the private banking space. However, in 2025, we began to see some outperformance within the banking sector, even when the broader market was weak.
This trend seems to be continuing. Over the past few weeks, banking and financial stocks have outperformed the Nifty. This is significant because financials are typically early indicators of an economic turnaround.
Strength in banking stocks suggests improving macro conditions. In the near term, a pullback towards 55,700 or slightly lower cannot be ruled out. However, the broader trajectory points towards higher levels—potentially 60,000 or beyond—in the coming weeks.
As long-term investors, we have largely avoided the IT sector for several years. This is not a new stance.
While there are occasional short-term trading opportunities—as seen in early March—the structural outlook remains weak. Earnings growth in large-cap IT companies has been subdued for a long time.
This is reflected in performance as well. Over a 10-year period, the Nifty has outperformed the IT index. The core issue is lower earnings growth compared to the broader market. Therefore, from an investment perspective, IT is not a preferred sector at this stage.
A balanced approach is ideal.
There are growth stocks where earnings remain strong, but valuations have corrected significantly—making them attractive. At the same time, there are value opportunities in sectors that have underperformed for extended periods and may be poised for cyclical recovery.
Both strategies have merit. Value investing helps limit downside risk, while growth investing can deliver higher returns when market conditions improve.
Yes, the structural outperformance of mid- and small-caps relative to large-caps remains intact. This trend has been visible throughout the post-COVID rally.
Although there was a correction in 2024, recent data shows that mid-caps have once again outperformed the Nifty. The relative strength index of mid-caps versus the Nifty is at a 52-week high, indicating strong momentum in the broader market.
FII flows are influenced by multiple factors. One key driver is the US dollar cycle. Historically, strong inflows into emerging markets have coincided with a weak dollar.
While we are currently in a dollar-weakening phase, India has not benefited as much as other emerging markets. A major reason is currency weakness—the rupee has depreciated even as other emerging market currencies have strengthened.
Additionally, structural factors such as taxation also play a role in influencing foreign investment decisions. For sustained FII inflows, policy support—particularly on currency stability—may be required.
Earlier, it appeared that USD/INR had peaked, especially after RBI intervention. However, the currency has not broken below key technical levels and has started moving up again.
There is a possibility of the rupee retesting the 95 level in the near term. This could remain a source of concern unless corrective measures are taken to stabilise the currency and attract foreign flows.
A decline is likely, but it may not be immediate.
Even if a peace agreement is reached, supply chains will take time to normalise. There could still be a demand-supply mismatch due to disruptions in the Middle East.
We may see an initial dip in prices, but crude is likely to stabilise at a higher base—possibly in the $75–$80 range. A clearer trend will emerge only once the situation fully evolves.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.