The demand for gold and silver has hit an all-time high, due to volatility in the Indian equity markets and concerns over the health of the domestic economy, Sumeet Bagadia, Executive Director, Choice Broking, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) Rupee breached 72/$ mark in the week gone by. Where do you see the currency headed in the near term, and what is causing the volatility?
A) We are expecting the rupee to trade mixed due to prevailing geopolitical tensions. In addition, the ongoing tensions in the Middle East leading to oil disruptions can weaken the rupee.
Also, Bullion prices have been strong owing to the above tensions which could limit any major downside in the INR.
Moreover, the demand for gold and silver has hit an all-time high, due to volatility in the Indian equity markets and concerns over the health of the domestic economy.
The Centre could come up with further new plans and policies such as additional GST rate cuts or relaxing direct taxes on corporates which could boost domestic investments and limit major weakness in rupee.
Moreover, the cost of exports for global buyers could be cheaper. The surplus money released by the RBI to the Centre could help in reviving the economy.
But then, the diversification of those investments/funds to which sectors is still a question of doubt which can keep the markets confused in the near term.
Amid brewing trade wars, fears of the global recession may keep the rupee choppy. In conclusion, the above factors are more likely to bring sideways to a bullish trend in the Indian Rupee with respect to the dollar.
Q) What does the rollover data suggest for September series? Do you think the market is likely to remain under pressure? Top stocks with long and short rollovers.
A) Rollovers of Nifty and Bank Nifty in August stood at 69 percent, and 66 percent respectively, compared to 74 percent, and 77 percent seen in the last series, while market-wide rollovers stood at 89 percent versus 91 percent in the previous month.
Cost of carry for both the indices was higher in comparison to their three-month average. For the September F&O series, we expect Nifty to witness wild swings.
September expiry starts with the maximum open interest build-up in Nifty call options, at 11,700CE, and for Nifty put options, at 11,000PE.
Top stock with long rollover include companies like Shree Cements, Castrol India, Union Bank of India, Bharat Forge, and Godrej Consumer Products.
Top stocks with short rollovers include companies like IDFC First Bank, NALCO, Indiabulls Housing, MCX, and Jubilant FoodWorks.
Q) Any big cues to watch out in September month which could dictate the trend?
A) Key event to be watched out will be the policy meeting outcome on the stress in the realty sector and any other such events for the revival in the domestic economy.
Till date, although the monsoon in totality is normal, there are still patches of a below-normal monsoon in most of the agrarian areas of the country.
So the progress of monsoon is important and will be keenly tracked. Apart from this any political development on Kashmir will have an impact on the market.
Internationally, the development related to the Sino-US trade war, Brexit and Hong Kong protest can bring some negative in the market.
Q) Nifty50 closed the week with gain but some profit-taking was seen towards the close of the week. What is leading to the nervousness on D-Street despite positive measures announced by the govt in the week gone by?
A) The market is not confident on the sentiment reversal post the measure announced by the government. Even the surplus fund distribution by the RBI to the government was not able to improve the sentiment.
These coupled with the uncertain global environment are the main reasons for the market notwithstanding at higher levels. The negativity in the market can be validated from the higher rollover of short position for the Sept. series.
Having said that, we feel that H2 of the fiscal will be relatively better than H1, reflecting an improvement in the general economy.
Q)-Top stocks which hit fresh 52-week high include HDFC AMC, Asian Paints, Bata India, Apollo Hosp, Dr LalPathlabs, and Berger Paints. Most of the names are companies with quality management – do you think TINA factor is playing in some of these stocks, and the momentum will go on for some more time?
A) HDFC AMC
The stock has performed well in the last one year after listing. The stock is trading above its 21 and 500-days simple moving averages, which show that there is more upside.
On the weekly chart, the stock has been trading in its upward rising wedge formation and is hovering near the breakout zone.
The RSI reading is at 72.43 level and gives positive crossover, apart from this, the RSI has formed symmetrical triangle and also trading above this formation, which points out a positive breath in the counter.
Resistance: 2,600-2,700 Support: 2,100-2,000
The stock is continuously trading in an uptrend and has given a breakout above its horizontal trend line, which is placed at Rs 1,479 that indicates upside movement.
However, the stock has also given a breakout from its descending triangle formation and is now trading above this formation, which may see positive sentiment in the counter.
Resistance: 1,750-1,800 Support: 1440-1400
The stock has started to trade around its all-time high, as the momentum dynamics has shifted to a new zone.
The stock has reached its uncharted territory with ample volume activity, which indicates a favourable condition in which supply can get absorbed by fresh demand. Therefore, we can expect further upside movement.
Resistance: 1,750-1,800 Support: 1,360-1,300
The Pharma Index is not performing these days and it will take time to do so. Apollo Hosp reached its all-time high but the stock is very volatile, and the next resistance level is around Rs 1,550-1,600, and supports are placed at Rs 1,420-1,355.
A moment indicator RSI is also trading sideways, with a negative crossover, which shows that the near-term trend remains bearish.
The stock has been trading near support of its 21-day moving average on the daily chart, which suggest that the stock has a great potential.
Furthermore, the index has been formed a symmetrical triangle and is also trading above this formation which shows positive movement in the counter.
Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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