"The decline seen in the key indices from the top in September appears complete," Rohit Srivastava, Founder of Strike Money Analytics and Indiacharts said in an interview with Moneycontrol.
After Diwali, he expects the current move to gain momentum in further short covering. "I expect at least 44,800 in the coming days for the Bank Nifty and 19,840 for the Nifty." The Nifty ended at 19,425 on November 10.
If the Nifty picks up in the next few weeks, the momentum will go back to sectors like PSU and autos stocks, says Srivastava with almost three decades of experience in the equity markets.
Q: Do you expect one more leg of correction in Bank Nifty after Diwali?
No. The decline seen in the key indices from the top in September appears complete. In the near term, after Diwali expect the current move higher to gain momentum in further short covering. November should mostly end at higher levels than where we are today. Expect at least 44,800 in the coming days for the Bank Nifty and 19,840 for the Nifty.
Q: What should be the market strategy on Muhurat trading day?
For traders, the near-term trend remains bullish so the strategy on Muhurat trading day would be to hold onto long positions or add to bullish positions. For investors, however, as we head into December, I would be cautious and attempt to create cash at higher levels given that the macro risks to markets have not gone away and are flashing red.
Also read: Most listings since last Diwali deliver bumper returns as bulls rule the market
So surely it is not a time for investors to be complacent.
Q: What is/are the sector/s to focus on Muhurat trading day?
Auto and Pharma sectors appear poised well for near-term gains. In fact, Pharma might even have legs longer term where defensive money can drive prices higher even in a difficult market. So investors can increase their allocation to healthcare.
Q: Where is the oil price headed now, considering the correction of over $10 a barrel since mid-October?
Oil prices have given up their gains despite two different wars that have hit the world in the last two years. Somewhere the oil trend appears to remain lower. Oil prices may continue to languish and head back to $70 or lower.
Whether this is due to demand or supply holds the key. Supply is expected to get tight in the coming years as shale production goes lower. So, the real issue is whether demand picks up. A slowing world economy can be the only reason for oil prices heading down.
Also read: Strong fundamentals, better earnings keep D-St upbeat in Samvat 2080
Q: Fundamentally there are reasons for market rebound like lower oil prices and hopes of a peak in the rate hike cycle, but technically, is there any possibility of correction towards a 200-day EMA once again in the coming weeks?
Let me put it this way. Sentiment is extremely negative with large short positions. Markets always go against crowd thinking so in the near term we may not go back to the 200-DEMA (exponential moving average) right away till this negative sentiment is squeezed. Only after that maybe there is a case for us to come back to test it.
The reasons will again be things like the market finding out that the interest rate cycle did not change or that the US tipped over into a recession. Europe and China are already near recession, so something has to change.
Q: After reading the charts, do you think the Nifty FMCG will break down the consolidation once soon, and then will set for a strong rally in the following weeks?
The immediate trend is higher first. FMCG has not been my go-to sector because growth stocks will attract more money and give better returns.
Also read: Why ace investor Shankar Sharma doesn’t go for largecap stocks
If the Nifty picks up in the next few weeks the momentum will go back to sectors like PSUs, Autos etc and not necessarily FMCG.
Q: After recent consolidation, do you think the Nifty Midcap 100 and Smallcap 100 indices are set for a new leg of rally?
The small and midcaps have been going up one way for the last seven months, so we should prepare for more volatility and some shock at some point in time. This is not a time to be complacent in the small stocks. They may not fall tomorrow morning, but we have not had a decent correction in the segment to say that the next leg has started. It is the same leg that is going on.
Also read: Larsen & Toubro, SBI, Coromandel among ICICI Direct’s top bets this Diwali
Disclaimer: The views and investment tips expressed by investment 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.
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