We are just ahead of an important event such as RBI meet, and the markets need to sustain this important level of 10,800-10,900 mark since it is an important as support.
The markets need to sustain 10,800-10,900 mark, since it is an important support ahead of the RBI policy meet, Mustafa Nadeem, CEO, Epic Research, said in an interview with Moneycontrol’s Kshitij Anand.
Q) The Nifty broke below crucial support levels. The S&P BSE Sensex slipped below 37,000, while the Nifty50 wiped out gains made in 2019. What is the way ahead for markets?A) At this point in time, the way ahead seems to be a bit directional. Since we are in a long-term trend with higher highs and higher lows, we believe at these levels there may be some buying that can come into the market.
It is also to be noted that we are just ahead of an important event such as the RBI meet. The markets need to sustain this important level of 10,800-10,900 mark since it is an important support.
If we are not able to sustain 10,800 levels the selling pressure will continue, and we may see the market drifting towards 10,100 on the Nifty50, and 33,500 for the Sensex. This is not the level where you can be aggressive and come out with your shopping bags.
Q) The S&P BSE Midcap index has plunged more than 20 percent and the S&P BSE Smallcap index is down 27 percent from their respective record highs. Can we say that broader indices are in a bear market?
Small and Midcap have been in a downtrend and it's been more than a year. The broader market is in a bear grip, it is just that few heavyweights/blue-chips and Index that are performing.
Q) Mistakes that one should avoid making, especially at a time when the markets are falling?A) Not catching a falling knife. By knife means those stocks that are going to hurt your capital. Many investors often get the idea of cheap prices as a value while there has to be a filter.
The management, business model, earnings, past few quarters and profitability—all these help make an informed decision, but not all the stocks are valuable. If one still wants to do so, it's better to take a bet on a sector rather than few stocks, as that may help in diversifying risk.
Q) FIIs are certainly fleeing India after the recent tax surcharge. What are the kind of levels you are looking at for December 2019? How will be the next six months for D-Street? Brokerage firm Phillip Capital has slashed the target price for Nifty for March 2020 to 11,300 from 12,200. Are you also reworking Nifty targets?
A) We believe the market is in a broader range of 11,700 – 10,200. This can now further be reduced to 11,500 – 10,200. At this point, the downside risk is higher as compared to the upside.
Q) More than 300 stocks are trading below 200-DMA. These include MRF, 3M India, Maruti, Dr. Reddy’s, Britannia Industries, Bajaj Auto, NIIT Tech, RIL and Lupin. Are they worth a buy at lower multiples for a long-term horizon? Or, should investors go for stocks that are trading above 200-DMA?A) Not all but yes few of them are stocks worth having in a portfolio. Pharma space has been in a bearish trend and is underperforming for long.
There is a cyclical nature in auto stocks and there may be rebound in them. Stocks like Maruti Suzuki India, Bajaj Auto, Reliance Industries and Britannia Industries have been wealth creator and they will continue to be in the long term. So, these are of course values plays, which are leaders in their space and are available at a good price.
The stock is above 200-days SMA is already an outperformer and will continue to be part of long-term portfolio but below 200-SMA stocks, which we mentioned, are worth adding in a gradual way.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.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.