Market strategy: Time to buy, sell or hold stocks? Here's what analysts say

It has been a choppy ride for the markets over the past few weeks. Despite several attempts, the indices have failed to cling on to the gains and succumbed to global and domestic cues. Most analysts expect the markets to remain choppy in 2022, but suggest there would be ample stock-specific opportunities all through the year.

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Timing the markets to catch a low, analysts caution, will not be a wise strategy at the current levels given the slew of domestic and global developments over the next few weeks. While at the global level developments related to Russia – Ukraine war and its implications for commodity markets, especially oil & gas will keep the markets volatile, the Reserve Bank of India’s (RBI’s) plans to hike rates have not been fully discounted yet by the markets, they said.

“The RBI's response till now is not adequate to address the rise in inflation. A 50 basis point (bps) increase in rates is very likely. The 10-year G-Sec yield has now moved to around 7.5 per cent levels and could inch up another 50 bps. It has not yet factored in the likely June increase. The markets can correct sharply once the RBI does do that hike in June. I suggest investors use a market correction to buy good blue-chip stocks. My Nifty target for December 2022 is 14,660, which is a worst-case scenario for the index,” said Jigar Shah, chief executive officer at MIB Securities India.

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Thus far in calendar year 2022 (CY22), the S&P BSE Sensex and the Nifty50 have lost around 7 per cent each. The correction in the mid-and small-caps has been even sharper, with both the indices slipping 10 per cent and 11 per cent, respectively on the BSE during this period. In the past one week, however, there has been some pullback as the S&P BSE Sensex and the Nifty50 moved up nearly 2.5 per cent each amid volatility.

Selling by foreign institutional investors (FIIs), according to an ICICI Securities note, has been seen across emerging markets in the last one year. Indian markets saw outflows of more than $22 billion in the current calendar year itself.

“The current recovery for the Nifty may extend towards 17,000 levels. However, 15,600 will remain a very crucial level to watch out for,” the ICICI Securities note said.

A correction in oil and commodity prices, believes Sunil Singhania, founder, Abakkus Asset Manager, might allay the inflation fears to some extent and present the trigger for an up move in the markets.

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“Higher base effects will also start to kick in from October 2022. We believe inflation probably has peaked. If our view on oil, commodity and inflation does come true then there might be a surprise of interest rising less than expected. Any such possibility can be a key catalyst for a risk on and positive for equity markets. With fundamentals continuing to be strong for India and now valuations also in line with 10-year averages, the risk reward for investors is only getting better," he said.

Pankaj Chhaochharia, India equity strategist and an economist at Antique Stock Broking sees limited downside in Indian equities from here on as most macro risks are priced in. “It is a suitable time to add economy-facing sectors in a staggered manner. However, given the risk of hard landing due to sharper rate hikes, we recommend adding quality large-cap names which also provide margin of safety. Within sectors, our preference remains towards capital goods, real estate and banks,” he said.