Market Takes a Break After Reaching New High, Analysts Say Buy on Dips

Indian Stock Market Takes a Break After Reaching New High!

The Indian stock market has been experiencing an impressive surge, with record highs being broken for seven consecutive weeks. However, on December 18th, the Sensex and Nifty indices slightly declined, leaving investors questioning whether the market is taking a break or if this signifies the end of the upward trend.

The dip was mainly due to profit-booking in sectors such as banking, IT, and real estate, which were previously driving the rally.

Financial analysts state that the recent Indian stock market correction is a natural and healthy occurrence after a steep climb and that there won’t be a sharp decline in the market. They believed that the market had entered “overbought” territory and that a temporary correction was due.

Despite the dip in blue-chip indices, the broader market proved resilient as midcap and small-cap indices continued to inch higher. This defied concerns about overheated valuations in large-caps. Defensive sectors like pharma and consumer durables also found their footing, showcasing a welcome diversification in market participation.

To capitalize on temporary price drops and pick up promising stocks, analysts recommend a “buy-on-dips” strategy. However, they caution investors to focus on sectors and companies with strong underlying fundamentals instead of chasing the latest trends.

VK Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, has suggested that investors adopt a cautious approach in the current market scenario. According to him, investors should focus on large-cap stocks and book profits in mid and small-cap stocks, which have become overvalued.

This advice is in line with the opinion of other analysts who believe that the Indian stock market is seldom a smooth ride and is prone to corrections and volatility. Therefore, investors are advised to stay calm, adopt a strategic approach, and keep a long-term investment horizon in mind to emerge as winners in the ever-changing market landscape.