In the last three months while the Nifty has moved 10 percent down, Tata Motors has been flat. According to Shenoy, Tata Motors and Mahindra and Mahindra are the most resilient stocks in auto sector.
The Indian market closed the August series on a good note with the BSE Sensex gaining 405 points to close at 18,401 and the Nifty gaining 124 points to close at 5,409. The rupee appreciated sharply from Wednesday's low of 68.80 against the dollar and closed the day at 66.55 per dollar aided by Reserve Bank steps. The 3.5 percent jump witnessed on Thursday is the biggest single day gain since January 1998. ( Read More )
Techincal Analyst, Abhijit Paul, founder, Alphative Advisors LLP believes that in terms of the underlying trend, nothing much has changed. “What we are seeing is probably at the back of the fact that we have the expiry, we are seeing a sharp move,” he adds.
But market analysts are raising concern as to whether the Nifty can take out enough to hold the 5,450 mark on the upside and extend it further. According to Paul, market has potential in terms of price but in terms of time it will take a bit longer.
Expert Sandeep Shenoy of Anand Rathi Financial Services also believes that market is heading towards more recovery. “It is headed towards a decent level that would be atleast 3-4 percent higher than the current level and that is where the market will stabilise,” he adds.
Despite market's recovery, Siddharth Bhamre, Angel Broking is negative on September series as long as foreign institutional investors (FIIs) do not cover their short positions. “FIIs have formed index Futures short positions and have also rolled over in next series. So don't be very positive and excited because of this bounce,” he adds.
How to trade defensives now?
August series saw defensives like ITC lose almost 20 percent and experts seem to be a bit bearish on fast moving consumer goods (FMCG) and pharma sector. Yet Shenoy believes that the correction in high quality names is more to do with profit taking rather than anything else. He does not believe the seven-eight contributors to the Sensex will lose their sheen in a hurry and are unlikely to fall off anybody's shopping list.
Are metals a good bet now?
Most companies in the metal sector have been facing either balance sheet or operational issues. In this situation Tata Steel followed, to some extent, by JSW Steel are best poised to capitalise from this rally. Tata Steel has the highest degree of operating leverage, says Shenoy. “We have seen a bounce which could last for quite some more time but volatility is going to be part and parcel of this counter. We could see another 10-15 percent shave-off at any given time,” he adds.
Should one invest in auto sector?
In the last three months while the Nifty has moved 10 percent down, Tata Motors has been flat. According to Shenoy, Tata Motors and Mahindra and Mahindra are the most resilient stocks in auto sector and he is therefore, quite positive on these two names. “We feel that not only on a relative basis but even on an absolute basis this would outperform the markets on a broader perspective.
READ MORE ON market, sensex, nifty, rupee, dollar, Sandeep Shenoy, Anand Rathi Financial Services, Siddharth Bhamre, Angel Broking + Nischal Maheshwari, Edelweiss Financial Services
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