Bulls are fully in charge and have set a bullish tone for the September expiry led by the rally in Bank Nifty, and with banking space coming into the spotlight, 12,000 on Nifty is very much a possibility, Umesh Mehta, Head of Research, Samco Group, said in an interview with Moneycontrol’s Kshitij Anand.
Q) A week powered by the bulls which pushed Nifty beyond 11,600 levels. What led to the price action in the week gone by?
A) During the week, the market witnessed many gap-up openings indicating exuberance in the overall market sentiment.
Small and midcap indices led the market optimism making the rally more broad-based which was aided mainly by huge FPI inflows.
For the month of August 2020, FPI equity inflows have reached the highest levels of nearly USD 6 billion which happens to be the highest monthly number in history. And this led to the price action in the week gone by.
Q) September series rollover data suggest that bulls will most likely remain in control. Which are the important levels that one should track in September, and Nifty50 touch 12000 levels in this expiry?
A) Yes, the bulls are fully in charge and have set a bullish tone for the September expiry led by the rally in Banknifty index. With banking space coming into the spotlight, 12000 on Nifty is very much a possibility.
Immediate support for the Nifty is now placed at 11200 unless that is not broken, we maintain a bullish outlook. But, traders need to be careful as the potential upside might be limited.
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 NIFTY Bank rose by a massive 3.91 percent to end the week on a high note. This optimism was in reaction to the US Federal Reserve's policy shift to focus more on boosting economic growth and worrying less about inflation running too high.
Financials, realty, and Auto have witnessed strong buying interest. In the week gone by, metal stocks have consolidated after a steady uptrend. Going forward these stocks are likely to see buying interest and come back in limelight.
Q) Mid & smallcap 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) After a rough patch of over two years, broader markets have started to recover in the last few months. The outperformance by the mid & small-cap index is on the back of attractive valuations and increased retail participation - who are buying because they have excess liquidity in their hands & are hoping to make quick money in the rally.
Generally in a rising market, small caps tend to grow faster than the large caps but one needs to be cautious as the small caps will face sharper corrections in a falling market.
Investors should have a stock-specific approach and look for quality stocks with strong fundamentals.
Q) What is your call on the rupee which touched 5-month high? How will it impact sectors and FII flows?
A) The rupee touched its 5-month high on the back of Fed’s policy intention to keep interest rates at rock-bottom and keep system afflux with liquidity for an extended period of time even if the inflationary pressure kicks which led to the weakness in the US Dollar.
Rupee appreciation would hurt exporters, who are already adversely affected by the global economic contraction.
The rupee could further appreciate if this scenario persists, but going forward the RBI is expected to step in and its actions will be carefully monitored.
Q) Please share 3-5 trading ideas for the coming week?
A) Defence is a theme to watch out for in the coming weeks. In line with Atmanirbhar Bharat, the Government permitted upto 74 percent FDI in defence manufacturing sector through the automatic route.
This will promote indigenous manufacturing, development of defence weapons and will open a window of big opportunities for corporates to enter into the defence manufacturing space.
These government decisions towards defense may turn out to be a Y2K like opportunity similar to the IT boom back in 2000.Disclaimer:
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