Street Signs: 'Buy the dip' strategy, health care stocks gain, and more

Will ‘buy the dip’ persist? Wait and see
 

The Nifty on Friday dropped nearly 2 per cent since bottoming out in June. The index dropped 347 points to finish at 17,531. In recent weeks, traders have used any weakness in stocks as a buying opportunity. With foreign flows turning negative and global markets on tenterhooks, it remains to be seen if investors will continue to ‘buy the dip’. “The 14-day relative strength index has developed a lower top, suggesting that momentum is slowing down. The high degree of immediate support is set at about 17,000 levels. Before making strong long bets in the markets right now, traders should exercise care,” cautions Apurva Sheth, head of market perspectives, Samco Securities.

MFs spring to defence of thematic stocks
 

Defence stocks have been one of the strongest performers over the past year, with the Nifty India Defence Index gaining 70 per cent, even as the Nifty50 Index remained flat. Industry players said a few mutual fund houses are looking to launch thematic schemes, based on this index, to leverage the growing popularity of defence stocks amid structural drivers such as the government’s thrust on domestic manufacturing and rising geopolitical tensions. Interestingly, the Nifty India Defence Index was launched in January this year (with the base year as 2018). It comprises 10 stocks, with Bharat Electronics, Hindustan Aeronautics, and Solar Industries India having the highest weighting.

Taking the pulse of health care stocks
 

Shares of health care chains, such as Max Healthcare Institute and Aster DM Healthcare, have fared better than the benchmark indices over the past month. Analysts believe companies in this space could continue to do well over the long to medium term. They expect hospital chains to sustain the average revenue per occupied bed, led by price hikes and improvement in case mix. Analysts say after pandemic-induced disruption, the health care sector has reached a steady growth state with increase in lifestyle diseases. Market observers say bigger hospital chains are looking to expand by actively scouting for acquisition opportunities in several smaller hospital assets across the country.