Sectoral investment is catching up these days among youths who like to keep a tab on what is happening in the market. These are usually for short to medium term horizon. These sector selection can be based on Seasonality, macro change, charts & P/E ratio. In this we are going to use charts and P/E ratio combination to figure out which sector to choose.
Lets start with finding the sectors with P/E ratio less than the median on 15 year horizon. We will use Screener to identify this (The screenshot below is not from Screener but you can get the same data on Screener as well). It can be seen that current PE is 15.1 – seems lower than their median of around 19. This makes Bank a safe choice for sectoral investment.
Now that we know, Banks could be good bet considering lower valuation and positive future prospects due to RBI rate cuts, lets analyze technicals at a broad level with chart period of ~ last 1 year for Nifty Bank. Identify the supply zones and demand zones. Around 55000 is demand zone and 57500 is a mild supply zone. Entry point could be either 55000 or above 57500.
Along with the above, you need to check some macro economic factors involving Government, Geo Politics, War, RBI/Fed decisions which will give some outlook about the future.
Read about a long term negligible loss options strategy here.
