The last six trading days of 2019 will be slow and steady. The Street has already factored in all the positives, so there may be a pause before the market moves upward with an equal thrust, Umesh Mehta, Head of Research, Samco Securities, tells Moneycontrol’s Kshitij Anand in an interview.
Edited excerpts: Q. This week has been historic for Indian markets. Do you think the momentum will continue in the final six trading days of 2019?A. It was indeed an eventful week, with the Nifty and the Bank Nifty touching new highs. The bourses will continue their upward momentum in the coming week but with caution.
Since all the positives are already factored in by the Street there might be a pause before markets move upward with equal thrust. Hence the last six days of 2019 will be slow and steady.
Q. We have seen a wide divergence in the stocks that hit a 52-week low. On average, the stocks that have dropped to 52-week low are double the number of those that hit a 52-week high. Does this bother you?A. The wide divergence in stocks hitting 52-week lows and highs is definitely a sign of caution. Hence, the upward movement will be rocky as the market's progress in unknown territory.
Also, the number of stocks hitting 52-week highs is the least in the past few years whenever markets have made lifetime highs, which again indicates that the aggression required to move upwards is weaker.
Q. The coming week will be a truncated one as we approach the Christmas holiday. Has the much-talked-about ‘Santa Claus rally’ come early, with the Sensex and the Nifty touching record highs?A. This week’s lifetime highs were indeed a present for us investors, as there was a lot of gloom everywhere, especially since the RBI reduced the economic growth forecast and paused repo rate cut.
This is the beginning of a Santa Claus rally as markets are in a bullish uptrend and are expected to slowly move upwards.
Q. With benchmark indices at record highs, can you name three stocks that are ripe for a breakout and can be considered a good buy? Please mention the time frame with the call.A. HDFC Limited, Divi’s Laboratories, and Indraprastha Gas Limited are three stocks that are sitting at record highs and are ripe for a breakout.
However, investors should buy them after a decent correction and can hold them at least for a one-year horizon.
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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