Nifty has broken important support levels, triggering a risk of further downside, says Mr Rikesh Parikh, Vice-President-Equities, Motilal Oswal Securities. However, he tells Business Line that there could be some value buying by mutual funds and HNI. Excerpts from an interview:

Will markets face further downside?

The market has corrected sharply on account of global sell-off in the last week and dollar appreciating by 10 per cent from 48 to 52 levels since November 1. Nifty has broken important support levels of 5,000 and 4,700 and there are more expectations of a downside as Nifty has broken important multi-month supports of 4,720-4,750 range.

Is the rupee depreciation the trigger for the fall?

The fall is to some extent related to the rupee decline as it triggers some stop-loss levels for hedge funds and short-term FII investors.

With the steep rupee depreciation, if global concerns abate, will there be rally driven by FIIs?

If European concerns abate then there could be a local rally as FIIs will be able to invest more in Indian markets with a higher dollar conversion rate, and reduced prices of stocks in markets. There could be some amount of value buying by mutual funds and HNIs after a 15 per cent correction from 5,400 levels.

What should investors be doing in this market?

Markets will continue to trade with respect to developments in global markets and there could be further weakness with technical levels being broken in markets. This will give opportunities to invest in markets. Export-oriented sectors such as software, pharma should do well. Banks look attractive as valuations are below five-year averages.

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