The sector that has broken down and has significant representation on the index is capital goods. Technically, what do you see for some of those stocks?

A: Luckily, capital goods do not constitute the top five-six stocks on the index because it is quite interesting that in the last 2-2.5 weeks, while the Nifty has corrected about 200 points, the broader market has corrected significantly. The smallcap index has retraced 61 percent of its entire rise of the last four-five months. The midcap index has done about 50 percent. Capital goods has been one of the biggest underperformers and it is really disappointing because till the capital goods index does not show signs of strength, it does not make sense to buy these stocks just on face value.

When one talks about stocks like L&T, Siemens , BHEL one feels that these stocks cannot go lower. However, they have been seriously underperforming. I would not look at them. But I think the top five-six constituents of the index, whether Sensex or the Nifty, they contribute about 30 percent of the market and are looking the steadiest at this point. Stocks like ITC , Reliance ,ONGC , HDFC Bank and ICICI Bank , these five-six popular stocks, unless they correct significantly, the index is unlikely to go down too much.

This is an important takeaway. It is very important that one is invested in these five-six stocks atleast from a portfolio perspective because then one is moving along with the market and one would not suffer the kind of damage that we have seen in the midcaps recently. So, one has to be choosy. However, at the same time our favourites right now would be banking, technology to a certain extent and autos.