How to make money in a volatile market? Here are a few tips

A sharp depreciation in rupee, strong foreign portfolio investor (FPI) outflows and geopolitical tensions between Russia and Ukraine have put the bulls and the bears in a tug-of-war on Dalal Street in 2022 so far. 

The NSE benchmark Nifty 50 stood almost flat (down 0.23 per cent) at 17,314.65 on Friday against 17,354.05 on December 31 last year. Likewise, the 30-share pack BSE Sensex was settled last week at 58,191.29 against the 58,253.82 level that it stood at the end of 2021, indicating a marginal fall of 0.11 per cent.

Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities believes that the domestic equity market may stay extremely volatile in the near term. In an interaction with Business Today, he said investors must keep an eye on jobs and economy-related data in the US, as he suggested buying into domestic financials, pharma, IT and consumption-related stocks this festive season for long-term gains.

“At the same time, the second quarter results are also starting in India, which will intensify the volatility. From the second half of the month, our markets will start following domestic signals and act accordingly,” Chouhan said. 

The second quarter earnings season is set to begin with Tata Consultancy Services' results on October 10. Other IT majors HCL Technologies and Wipro will announce their September quarter results on October 12. Infosys will declare its results on October 13.

Chouhan felt that Sensex will trade in the range of 55,000-59,000 till Diwali. He sees Nifty staying in the range of 16,200-17,800.

He advised investors to add financial, pharma, IT and consumption-related stocks this festive season to create a long-term portfolio. For stock-specific investors, Chouhan said, “We like Axis Bank, Cipla, Infosys, ITC and Mahindra & Mahindra (M&M) at present.” 

Other than quarterly earnings, factors such as volatility in the 10-year US bond yield and movements in dollar index, crude oil prices and rupee-dollar exchange rate will impact domestic stocks, Chouhan said.