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Madhu Bansal, founder of The Finberg, provides an optimistic outlook on the Indian stock market, expecting it to rise despite potential minor corrections. He highlights the continued bullish momentum, with the Nifty and Sensex trading above their 20-day exponential moving averages (EMA) on a weekly basis. He attributes this bullishness to positive foreign investor data and strong rollovers in the Sensex contracts. While acknowledging the possibility of a correction, he argues that the market has already factored in major events like the budget and key company earnings, suggesting that the current levels have been discounted.
Bansal emphasizes the importance of volatility as a tool for traders and suggests a calendar spread strategy for navigating the post-budget market. He recommends shorting a strangle for the August 1st expiry and longing a strangle for the August 29th expiry, leveraging the expected volatility crush after the budget announcement. This strategy aims to profit from the decreasing volatility while protecting capital.
Bansal identifies specific sectors and stocks for potential gains. He expresses bullishness towards Coal India and BPCL, suggesting that any corrections in these stocks represent buying opportunities. He also highlights the potential for growth in PSU banks, the defence sector (particularly HAL), and the advertising media sector. The auto sector is also seen as promising due to anticipated favorable tax policies.
Bansal raises concerns about the high valuations of railway sector stocks and expects further corrections. He also addresses the increasing presence of retail traders in the options market, attributing it to the perceived lucrativeness and ease of entry. While acknowledging the potential risks associated with this trend, he does not foresee any major regulatory changes in the upcoming budget to address this issue.