As the fundamental and long-term growth prospects remain intact owing to the improvement in consumer demand, we expect small and midcap stocks to do well in the coming future and bulls would be able to take control in the run-up to Budget or post the event, said Ashis Biswas, Head of Technical Research at CapitalVia Global Research, in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:Q) Last week was a historic period for the Indian market as benchmark index Sensex scaled 50,000-mark but profit booking at higher levels pushed the market in red/flat towards the close of the week. What led to the price action – is it profit taking or something is worrying investors?
This recovery is primarily because of improving consumer demand, followed by improvement in the business investment. Gradually, as investors become more knowledgeable about the situation related to the COVID-19 pandemic, the sentiment starts to turn positive.
The sharp V-shaped recovery is just an adjustment of the initial overreaction as the information was less at the time when the COVID-19 began to spread all over the world.
The market doesn’t seem overvalued in terms of the fundamentals, but we believe that the market sentiment is at the peak of optimism.
An adjustment is inevitable and long due. As fundamentals are still intact, we don't see something that should worry investors.Q) Which are the important levels to track in the January F&O expiry week, and ahead of the Budget?
A cluster of support zone supported by other technical evidence suggests 13,900 (Nifty 50 Index level) will act as a pivotal point for short to medium-term perspective.
Investors with a short to medium-term investment horizon should track 13,900 levels. It is an important market to stay above this level to keep the intermediate trend positive.Q) Tata Motors has rallied by about 60% in January. What is fuelling rally in the stocks? Are investors considering Tata Motors to be India’s Tesla?
The relentless focus on cost control has helped the company gain operational efficiency and enhance free cash flows. It has enabled the company to deliver more than the consensus in its QoQ balance sheet performance - the primary factor fuelling the rally.
Seeing the management focus on innovation, consistent action and plan to provide the best customer satisfaction, Tata Motors can be considered India’s Tesla on a lighter note.Q) Small & midcaps witnessed some profit-taking. Do you think bulls would be able to take control in the run-up to Budget?
Yes, the current correction is primarily an adjustment of overstretched investment sentiment. The profit-taking is part of the healthy distribution and transferring of the hand of the investors.
As the fundamental and long-term growth prospect is still intact, driven by the improvement of consumer demand, we expect small and midcaps will do well in the coming future, and bulls would be able to take control in the run-up to Budget or post the event.Q) What should be the investment/trading strategy of investors ahead of the big event?
We expect the government to concentrate on increasing the allocation of public health spending. India's overall healthcare expenditure as a share of GDP is among the lowest globally.
The government's stimulus package, including the allocation under PM CARES, may be further enhanced to ensure all public facilities' essential services and drugs. As such, investors should focus on healthcare as an opportunity ahead of the big event.
Q) Top 3-5 trading ideas for the next 3-4 weeks?
Here is a list of top trading ideas for the short term:Biocon: Buy| LTP: Rs 393.80| Target: Rs 470| Stop Loss: Rs 350| Upside 19%
Biocon is currently moving in an uptrend channel. It has recently corrected to its lower band of the uptrend channel.
We recommend a buy with a target of Rs 470, and a stop loss can be placed below Rs 350 for a medium-term perspective.Cipla: Buy| LTP: Rs 808| Target: Rs 880| Stop Loss: Rs 767| Upside 9%
CIPLA has been trading in an upward trending channel. It has been trading above 200-DMA that indicates a positive outlook on the stock.
We recommend a buy on CIPLA above Rs 825, for a target of Rs 880, and a stop loss can be kept below Rs 767 for a short-term period.PVR: Buy| LTP: Rs 1,519| Target: Rs 1,650| Stop Loss: Rs 1,440| Upside 8%
PVR is recovering after a downtrend and has posted a breakout from the ascending triangle price formation. We recommend a buy above Rs 1,515 for a target of Rs 1,650 from a medium-term perspective, and a stop loss can be placed below Rs 1,440 on a closing basis.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.