The small and midcap have started to outperform over the last 2 months as the earnings were better than expectations and crossover of the long term averages have led to sharp outperformance.
For the expiry week,11,265 will be a strong support for Nifty while 11,600 will act as resistence, Rajeev Srivastava, Chief Business Officer at Reliance Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Q) Nifty traded mostly in the green in the week gone by and managed to hold on to 11,450-11,500 levels, what led to the price action on D-Street?
A) The Nifty50 ended flat with gains of 0.4 percent. The index was trading in a narrow range of 230 points but Nifty Midcap 100 and Nifty Smallcap gained by 3.8 percent and 6 percent respectively for the week.
The price action was led by reclassification of multicap funds announced last weekend, while incremental positive news flow in IT getting new deals, incremental positive revenue guidance, midcap IT stocks Happiest Minds getting listed and Healthcare companies receiving new drug approvals led to a sharp outperformance to gain by 6.4 percent and 8.9 percent for the week.Q) Which are the important levels that one should track in the coming week amid monthly F&O expiry on September 24?
A) The 50-Day average placed is at 11,265 for Nifty which continues to remain strong support and will act as a reversal point of the current up move.
On the higher side, a crossover above 11,600 levels would turn the monthly candle positive and witness short covering surpassing as 11,600 CE has the highest OI of 33 lakhs shares.
The price volatility would increase in the ban stocks being the monthly expiry for rollover to the next series.Q) Small & midcaps outperformed – does it looks like smart money has already started flowing in the broader market space?
A) The small and midcap have started to outperform over the last two months as the earnings were better than expectations and crossover of the long-term averages have led to sharp outperformance.
The Nifty50 has gained by 14 percent while the Midcap index has added 20.6 percent and Smallcap index by 33.3 percent over the last thee months.
We believe it will continue to outperform as they are trading near the long term averages on PE multiples and P/BV multiples.
With the Make in India initiative and large global companies making India a manufacturing hub, it will improve strong order books for various sectors. Lower interest rates will aid margins in the next few years.
The positive news flow of reclassification of funds would continue to attract new investments over the next few quarters.Q) In terms of sectors – IT and Healthcare were the top two sectors – is it the currency factor that is adding to the tailwind?
A) We have been maintaining a positive bias on both the sectors as they are global plays. Pharma has been the leader of the current up move since the start of the rally from April 20 after a huge underperformance over many years.
Regular drug approvals from USFDA, improved pricing in international markets and weaker currency led benefits have accrued for the sector.
IT sector has picked up with one of the largest gains of 68 percent over a six month period post strong results, better management commentary from the companies and a lot of large order wins from global companies.Q) Any short term technical trading ideas for the next 3-4 weeks?
A) Here is a list of short term trading ideas:Bharti Airtel: Buy | LTP: Rs 496 | Target: Rs 570 | Stop Loss: Rs 465 | Upside 15%
The stock has completed its 21-week corrective phase from its record high of Rs 612 levels it tested in May 2020.
On the weekly charts, it has closed at a long-legged Doji near the bottom of the range confirms a strong reversal from current levels.The recent correction post AGR verdict is a good entry point to accumulate being the risk-reward in favour and it has good support on the downside near to its 13 months average.
Container Corp: Buy | LTP: Rs 389 | Target: Rs 439 | Stop Loss: Rs 365 | Upside 12%
The stock has made a double bottom in the last few weeks at sub Rs 365 levels and witnessed a strong pullback from the lower range.
The key technical indicators and RSI has also reversed turning upwards and it is poised for a breakout from current levels. The stock has strong support at sub Rs 360 levels being the 50% retracement of the previous move ( Rs 263-474) over the past 2 quarters.ICICI Bank: Buy | LTP: Rs 369 | Target: Rs 400 | Stop Loss: Rs 320 | Upside 8%
ICICI Bank has witnessed a sharp correction from the 200-Days average and trending near to the long term support averages.
It has formed a triple bottom in the range of Rs 345-365 levels on weekly charts and the inside range on charts should give a breakout. The current up move will give a move to test again its 200-day average placed near Rs 415 levels over the next few months.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.