Sensex, Nifty remains volatile: Where should investors put their money? Experts decode portfolio allocation

The Indian stock market took a sharp U-turn to trade lower on Wednesday, with the Sensex and Nifty slipping as selling pressure resumed following a brief recovery. The decline came despite gains in select sectors and continued selling by foreign investors.

During the intraday session, Sensex fell more than 100 points, while the Nifty slipped below the 22,650 mark. Sectoral weakness was pronounced in healthcare and pharmaceutical stocks, which came under heavy selling pressure and weighed on the broader market sentiment.

However, both indices had opened higher on September 30 after witnessing a sell-off in the previous two sessions. In early trade, the Nifty 50 gained 0.2% to 22,762, while the BSE Sensex rose 0.46% to 72,877.11. The gains, however, failed to sustain as selling pressure emerged later in the session, dragging both benchmarks into negative territory.

What's driving the Indian stock market today?

The easing in crude oil prices comes despite persistent uncertainty surrounding the US-Iran conflict and concerns over the future of energy supplies from the region, he added.

In Asian markets, South Korea’s KOSPI and Hong Kong’s Hang Seng traded in negative territory, while Japan’s Nikkei 225 and Shanghai’s SSE Composite edged higher.

Foreign Institutional Investors (FIIs) remained net sellers in Indian equities, offloading shares worth ₹9,980.22 crore on Tuesday, exchange data showed.

The Sensex fell 242.65 points, or 0.33%, to close at 72,529.07 on Tuesday, while the Nifty declined 64.05 points, or 0.28%, to settle at 22,716.20.

Where should investors put their money?

Avinash Gorakshakar, Founder & Head Research Avinash Mentor Research, said that amid heightened market volatility, investors should focus on domestic-facing themes and sectors that are relatively less exposed to global uncertainties.

Gorakshakar further said that Capital goods, hospitals, hotels and FMCG are among the areas that could offer greater resilience, supported by domestic demand and structural growth drivers.

"Focusing on such domestic themes could help investors navigate the current volatile market environment more effectively,” said the market expert.

Meanwhile, Hitesh Tailor, Technical Research Analyst at Choice Broking, believes that the focus should be on selective sector rotation and stocks showing relative strength rather than broad-based buying.

“From a technical perspective, Nifty Auto (CNXAUTO), currently around 26,340, is showing support near its rising trendline on the daily chart. Further support is placed around 25,980, which is aligned with the 0.618 Fibonacci retracement level, making this an important zone to watch for sustained buying interest. Nifty Metal is also showing support at lower levels, with buying interest emerging after recent declines,” Tailor said.

CNXIT, currently around 28,215, has seen support near the 28,000 zone, and a sustained hold above this level could provide scope for a rebound. Meanwhile, Nifty Pharma has witnessed a retracement, but support is emerging around 26,400, which is aligned with its 50-Day EMA. The Pharma index continues to show relative strength, making this support zone important from a technical perspective.

“Given the elevated volatility, staggered buying on declines can be considered rather than deploying capital at one go. The focus should remain on sectors and stocks holding key technical support levels, while maintaining adequate cash to take advantage of better entry opportunities if volatility persists,” he added.