Compared to 2017, the mid-cap space looks promising at current levels, and investors always look for a sector that has more steam in it, Ritesh Ashar – Chief Strategy Officer at KIFS Trade Capital said in an exclusive interview with Moneycontrol’s Kshitij Anand.
Q) The Nifty rose by around 1.4 percent in the week gone by, despite wild movements on either side. How do you see the market panning out in the coming week?
A) The Nifty witnessed a pullback rally from the psychological level of 10,000, mainly on the back of global indices, which are expected to head upwards. On the weekly time frame chart, we observed 3 White Soldiers, which is a Japanese candlestick pattern.
Formation of 3 White Soldiers usually acts as a trend reversal pattern. In the current market scenario, the existing pullback may continue towards 10,700, which is a 61.8 percent retracement of the previous fall.
Q) The index also flirted with levels above its 200-DMA and 1oo-DMA this past week. But there are plenty of stocks that are trading above their long-term average. Are these stocks value buys at current levels?
A) Technically, stocks that are trading above 200-DMA are considered to have strength in the current market trend. Also, the same seems to be contradictory to an efficient market hypothesis, which denotes relative strength may continue in future. From this reference, one can consider this as a value buy at current levels.
Q) What is your call on small-cap and mid-cap stocks? Should investors stay away or just book profits on rallies?
A) Corrections in the price in recent times have been sharper or close to 20-25 percent. This creates a buying opportunity in (companies with) quality management and business.
Every falling knife is not bound to cut your hands. The recent correction was due to global sentiments and overvaluations in some of the stocks.
Higher time frame charts, mainly those on an yearly basis, are bullish. So it can create huge opportunity in the space and may outperform large cap stocks in times to come.
As compared to 2017, the midcap space looks promising at the current level and investors always look for the sector that has more steam in it.
Q) What should be the ideal strategy of investors in April series – buy on dips or sell on rallies?
A) As per RRG (relative rotation graph) analysis, IT sector is oscillating in the leading quadrant pointing towards the north, wherein relative momentum as well as relative strength is very high. So, IT may outperform the benchmark index in the coming week.
Q) Could you name the top 3-5 positional calls that could give handsome returns to investors in the April series?
Here is a list of top 4 stocks that can give up to 25 percent return.
MindTree: BUY| Target Rs 1,000| Stop Loss Rs 750| Return 17 percent
Mindtree on the monthly charts posted the horizontal consolidation breakout. With supportive oscillator, RSI has also posted trend line breakout that confirms the action towards the north.
Mindtree may continue to march in an uncharted territory. The intermediate target is placed at Rs 1,000, and the stock has potential to travel beyond the Rs 1,000 levels. On the other hand, the intermediate support placed at Rs 750.
NIIT Tech : BUY| Target Rs 1,000| Stop Loss Rs 735| Return 9 percent
The stock has posted the rising channel breakout with intermediate support placed at Rs 735. After the breakout, the stock posted through back towards breakout, and NIIT Technologies posted a pullback of more than 10 percent from the recent top.
With the secular uptrend being intact on the higher time frame chart, such a pullback should be capitalised on as a buying opportunity for adding more longs given the conviction in the structural trend. The intermediate target for NIIT Tech is placed at Rs 1,000.
LIC Housing Fin Ltd: BUY| Target Rs 650| Stop Loss Rs 530| Return 17 percent
LIC Housing Finance, on the higher time frame charts mainly (monthly) is moving in a clear uptrend. In the current scenario, it is unfolded into a corrective pattern, wherein correction has been completed at an important Fibonacci retracement of 50 percent of its previous bull move.
The recent move suggests that the stock is poised for an initial leg of up move towards Rs 650 and one can accumulate this stock on dips till Rs 550. A strong support is placed around Rs 530.
Exide Industries BUY| Target Rs 300| Stop Loss Rs 210| Return 25 percent
Exide Industries is currently trading at Rs 240 levels. The stock is poised for an initial run up to Rs 260-300 levels, which translate into an upside of 20 percent. However, the stock can have extended moves.
The stock made an intermediate bottom at Rs 192, which happens to be 61.8 percent Fibonacci retracement level for the Rs 170-250 range.
The immediate resistance for the stock is placed at Rs 250. If the stock closed above this level it will open the way for Rs 260–300 levels on the upside.
Oscillators such as RSI on the Weekly charts has posted a trend line breakout, which eventually pushed the RSI on the higher side, adding strength to the underline.
The stock can be accumulated at current levels or on dips till Rs 225-230 for an initial run-up to Rs 290-300. The stock has limited downside till Rs 220–210.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.