Technology and FMCG sectors might turn out to be a better investment opportunity for investors as indices are already trading at all-time highs, they might provide cushion, Gaurav Garg, Head Research, CapitalVia Global Research Limited said in an interview with Moneycontrol’s Kshitij Anand.
Q) A historic week for Indian markets as Nifty50 climbed 13,700 while the S&P BSE Sensex inched closer towards 47,000. What led to the price action?
A) Liquidity in terms of positive institutional inflow is what Street is enjoying. Further, optimism over the coronavirus vaccine and hopes of a fresh stimulus in the US may drive markets higher next week which was clearly visible in this week’s performance.
Crude oil prices have appreciated showing signs of demand revival in the global economy.
Q) Talks of additional stimulus from the US is something which is keeping markets across the globe going. Do you think a further 5% rally could happen on stimulus measures?
A) Yes, I do believe that the market might show more traction if additional stimulus comes in as so far there has been a positive impact of the stimulus on the ground and on markets as well.
Expectations from stimulus this time would be that it should focus on specific sectors that have not been able to recover fully.
Also, the size of the stimulus will be important, and any surprise might affect every asset class including Gold. However, indices across the globe are trading at life-time highs and hence investors should be cautious while making any fresh positions.
Q) Midcap and smallcap stocks outperformed in the week gone by -- what led to the price action is it strong macros or just the liquidity wave?
A) In fact, both strong macro factors along with institutional inflow pushed markets to fresh all-time highs. There was under-performance in broader market indices for 2-3 years.
Now, investors have started moving into small and mid-cap stocks where they are buying on decent valuations.
After the COVID-19 vaccine and US elections, economic uncertainty is close to getting over and there is no more major event lined up globally.
Q) FIIs have poured in more than Rs 36000 cr in the cash segment of the Indian equity markets so far in December – approx. 50% of flows what we saw in November. Do you fear if the tide turns --- it will sink a lot of boats?
A) FII inflows might continue to be on the higher side, however since the market rallied too much too fast, investors should turn cautious and should avoid aggressive longs.
However, not to forget about domestic inflows which might turn positive and we can see a role reversal between foreign and domestic investors.
MSCI Index has attracted an additional $ 7 billion into India. The recovery in the Indian economy and better than expected Q2 results also have contributed to strong capital inflows.
Q) What should investors do when Nifty50 trades above 13700-13800, Sensex at 47000?
A) Investors should book partial profits of their portfolio as Nifty50 has rallied up to 13,800. However, I am optimistic over the growth rate of India Inc. after a surprise Q2 GDP growth rate along with Q3 financial results which might surprise the street on the positive side.
Technology and FMCG sectors might turn out to be a better investment opportunity for investors as indices are already trading at all-time highs, they might provide a cushion.
Q) Your 3-5 trading ideas for the coming week with target and stop-loss?
A) Following trading idea might give good returns in the next week:
Here are three trading ideas for the next week:
Axis Bank Ltd: Buy| LTP: Rs 609.45| Trigger Price: Rs 611| Target: Rs 643| Stop Loss: Rs 592| Upside 5%
The stock has witnessed a reversal from its support level, and further strength might be possible if it sustains above 611. Axis bank might out-perform its private bank peers in the coming weeks.
The crossover of its short and medium-term averages on the daily charts with strong volumes are showing signs of further upside.
Hero MotoCorp Ltd: Buy| LTP: Rs 3135| Trigger Rs 3158| Target: Rs 3265| Stop Loss: Rs 3095| Upside 4%
The stock is witnessing a bounce back from its important support level, and if the stock sustains above 3158 which is the immediate resistance level, then it might give a strong bullish breakout.
The stock is sustaining above its important moving averages which is a positive sign.
Cadila Healthcare: Buy| LTP: Rs 476| Trigger Price Rs 481| Target: Rs 515| Stop Loss: Rs 460| Upside 8%
The stock is forming a bullish flag pattern, and if it somehow sustains above 481 then it might lead to positive momentum. The stock has seen a significant addition of volumes in recent days especially in cement stocks.
The stock is showing strong momentum and in the coming week, it might stretch towards Rs 520 levels.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.