Nifty’s 4% correction offers attractive entry point for long-term investors: Kotak Neo’s Chouhan

The recent 4% decline in the Nifty index has revealed a potential entry point for long-term investors, according to Shrikant Chouhan, Head of Equity Research at Kotak Neo. Chouhan emphasized that the market's repeated attempts at key support levels demonstrate its resilience, even amid global market turbulence. He stated that entering the market at these levels with a 6-12 month outlook could yield positive returns.

Chouhan pointed out that Nifty's technical support has consistently been around the 22,200 mark, with the market often seeking refuge there. Should the index surpass 22,800, a swift recovery towards 23,200 could be expected. Regarding mid-cap and small-cap stocks, Chouhan noted that profit-taking in high-beta counters is largely influenced by global events, such as the Federal Reserve's policy decisions and elections in Israel and the US.

He advised investors to maintain flexibility and allocate funds to select mid-cap and small-cap companies alongside large-cap stocks for long-term growth. Chouhan warned of potential risks from elevated crude oil prices and hawkish central bank policies, which could adversely affect market sentiment. He also cautioned that India's limited exposure to AI-driven tech sectors compared to global counterparts may introduce minor pressure to market sentiment.

However, domestically strong quarterly earnings provide underlying stability. Chouhan identified private banking, defense, and pharma sectors, particularly those in CDMO space, as opportunities for investment. He cautioned against investing in insurance, hospitals, and commodities due to regulatory interventions and near-term pressure from a rising US Dollar Index.