Banking and financial stocks have seen positive momentum due to weaker rupee, whereas technology stocks are witnessing some sort of underperformance compared to benchmark indices, Gaurav Garg, Head of Research at CapitalVia Global Research, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:Q) A week powered by the bulls which pushed Nifty beyond 11600 levels. What led to the price action in the week gone by?
A) The Nifty50 has gained around 2.06 percent in the week gone by and has closed above 11600. Economic recovery, positive global cues, gains in financial stocks, and global optimism around potential coronavirus vaccines could be possible factors leading to the rally.
The Nifty Bank has gained around 3.76 percent during the week. Rollovers were higher than expected with positive roll cost.
The market may remain range-bound with positive bias in the September series. The resistance for Nifty Bank is placed at 25670 and the support is placed at 23200.
Q) September series rollover data suggest that bulls will be most likely to remain in control. Which are the important levels that one should track in September, and Nifty50 touch 12000 levels in this expiry?
A) The Nifty is holding above the 200-day EMA and shifting its support gradually higher. If Nifty sustains 11,550-11,600 levels, then it can further move towards 11,715.
The support for Nifty is now placed at 11530 and 11400. The resistance for Nifty is placed at 11,715 and 11,850. Also, lower India VIX might help the bulls prove their dominance. However, traders should avoid aggressive longs at higher levels.
Q) In terms of sectors, the action was focused on financials with banks taking the lead in terms of sectoral gainers, followed by realty and auto. What led to the price action, and in the coming week do you think Metals would be in limelight?
A) The recent capital infusion in some banks and non-banking financial companies had bolstered investors’ sentiments. Dollar inflows into the stock market and gains in other Asian peers have helped fuel the rupee's strength.
Optimism about a potential treatment for coronavirus and pick up in business activity led to the rally in the above-mentioned sectors.
Metal stocks are expected to remain in focus on the back of demand recovery, increase in raw material prices, healthy exports, and strong domestic demand in China. With continued economic recovery, steel stocks may do well along with India's PMI index.
Q) Mid & small-cap index has wiped out losses for the year 2020 compared to Sensex, or Nifty which still trade in the red. What is leading to optimism, and what are the factors which could steal the thunder for broader markets?
A) In my opinion, better than expected Q1FY21 results along with higher inflows helped broader indices to out-perform NIFTY & SENSEX.Investors should continue to hold quality mid and small-cap scrips and ride the current upward momentum. However, higher valuation is a big question mark as earnings yet to justify current economic turmoil.
Q) What is your call on the rupee which touched 5-month high? How will it impact sectors and FII flows?
A) The Rupee was at 73.38 rupee saw an intraday high which had significant positive momentum for equity markets too. Meanwhile, with the view of Reserve Bank of India Governor said on Thursday that the country's economy remains much stronger amid the coronavirus pandemic in domestic equity market along with the steady foreign fund inflows has to turn out to be a significant impact on currency and the weaker dollar helped the Rupee to gain, as the dollar index is trading around level of 92.
Banking and financial stocks have seen positive momentum due to weaker rupee, whereas Technology stocks witnessing some sort of underperformance compared to benchmark indices.
Q) Please share 3-5 trading ideas for the coming week with a time horizon of 3-4 weeks.
A) Following technical trading ideas might give good returns for a period of 3-4 weeks:
Kotak Mahindra Bank Limited: Buy| LTP: Rs 1469| Target: Rs 1565| Stop Loss: Rs 1419| Upside: 6%
The stock has witnessed reversal from its support level placed in the zone of 1400 further strength might be gained if it sustains above 1469.
The crossover of its short and medium-term averages on daily charts with strong volumes showing signs of further upside. RSI has also turned positive on weekly charts, indicating limited weakness in the stock.
SBI Card: Buy| LTP: Rs 838.90| Target: Rs 875| Stop Loss: Rs 810| Upside: 4%
The stock is witnessing MACD cross-over in daily charts, also stock is forming a bullish flag pattern, if stock somehow sustains above 840 might lead to positive momentum. The stock has seen a significant addition of volumes in recent days. Risk and reward are favorable at this juncture of time.
Larsen & Toubro Infotech Ltd: Buy| LTP: Rs 2521| Target: Rs 2675| Stop Loss: Rs 2440| Upside: 6%
The stock is forming a bullish flag pattern on daily charts and breakout might result in further strength which might lead the stock to break 52-week high.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.