Optimism regarding IT firms and its upcoming results of the second quarter along with the positive growth guidance of HCL Technologies has helped IT stocks stand firm regardless of the market conditions and to withstand the selling pressure, Gaurav Garg, Head of Research at CapitalVia Global Research Ltd, said in an interview with Moneycontrol’s Kshitij Anand.
Q) Nifty struggled to hold on to 11000 but found some support near 10800 levels. What led to the price action or scared the bulls?
A) The recent fall in the Nifty can be attributed to various factors, most notably the warning by RBI regarding the possible rise in bad loan ratio.
Further, institutional selling added fuel to the fire and global headwinds are not really favorable since there is good amount of skepticism ahead of presidential elections in the U.S.
Also, there is increased chances of the second wave in Europe which could again lead to the disruption of certain business activities. All these led Nifty below 11000, however, on Friday Nifty managed to bounce back and close above the crucial level of 11000.
Q) Looking at the September expiry data -- how is the October series likely to pan out for investors? What are the important levels to track?
A) Investors may have a positive outlook as it is very likely that Nifty will hold the above 10600 and can retest 11500 on the upside. The level of 10800 is a crucial level on the downside and a breach of which could be used by investors to buy at lower levels.
Q) In terms of sectors, selling was seen in Telecom, Realty and Auto space while IT sector bucked the trend. What led to the price action?
A) Optimism regarding IT firms and its upcoming results of the second quarter along with the positive growth guidance of HCL Technologies have helped IT stocks stand firm regardless of the market conditions and to withstand the selling pressure.Q) After the recent fall - is it a good time for investors who were looking to deploy the cash or should they wait for some more fall before buying?
A) Nifty as of now is quite oversold and this fall can be regarded as a healthy fall which gives scope for investors to buy at lower levels, it can be considered as an appropriate time for deploying funds as recovery is expected to be seen with markets trying to get back to their fair values.
Q) Any 3-5 short term trading ideas by experts for the next 3-4 weeks?
A) Following trading idea might give good returns in next week:
Tata Consumer Products: Buy| LTP: Rs 509| Trigger Price: Rs 512| Target: Rs 540| Stop Loss: Rs 495| Upside: 6%
The stock has witnessed a reversal from its support level, and further strength can be gained if it sustains above the level of Rs 512.
The crossover of its short and medium-term averages on the daily charts with strong
Volumes are showing signs of further upside. RSI has also turned positive on the weekly charts, indicating limited weakness in the stock.
Dr. Reddy’s Laboratories: Buy| LTP: Rs 5114| Trigger: Rs 5203| Target: Rs 5450| Stop Loss: Rs 5000| Upside: 6%
The stock is forming a bullish flag pattern, and if the stock somehow sustains above 5203 that might lead to positive momentum. The stock has also seen a significant addition of volumes in recent days. The risk-to-reward ratio is favorable at this juncture of time.
Polycab India: Buy| LTP: Rs 828| Trigger: Rs 837| Target: Rs 885| Stop Loss: Rs 800| Upside: 6%
The stock seems to have bounced from its support on the daily charts and a breakout from the level of 837 might result in further strength which might lead the stock to break its weekly high.
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