In the short-term, the Mid-cap and Small-cap stocks can rally a bit as they have been falling for 6 consecutive weeks. Second thing is that they are slightly oversold and look good for a short-term bounce back.
While the case to revisit the 11,000 mark does exist, but, it is hard to say that higher levels will be sustainable, Rohit Srivastava, fund manager – PMS, Sharekhan by BNP Paribas, said in an interview with Moneycontrol’s Kshitij Anand.
Q) After a volatile Feb series do you think Nifty will be able to climb 11,000 levels in March series?
A) The Nifty closed lower for the month of February, a third consecutive month of decline. Still, the decline in Feb was nothing to write about.
Will March be any different? While the case to revisit the 11,000 mark does exist, but, it is hard to say that higher levels will be sustainable. That said, markets are likely to rally in the short term from an oversold condition specifically in the mid-cap stocks.
Similarly, bank stocks have held out better than others due to which Bank Nifty has not made a new lower low in a while. A move back to 27,500 can occur.
Q) The broader market underperformed in Feb but it witnessed some selling pressure towards the close of the month. Do you see a revival in the small- and mid-cap indices?
A) In the short term, the mid and smallcap stocks can rally a bit as they have been falling for 6 consecutive weeks. Second thing is that they are slightly oversold and look good for a short-term bounce back.
But, we are not at the end of the road. Traders will have to be alert to the possibility that another decline phase for this segment could develop in the coming weeks. So, using a trailing stop might be a good idea here.
Q) FII also remained net buyers in Indian markets in February despite a lot of global as well as domestic headwinds. Do you think foreign investors are betting big on India?
A) The buying numbers in the cash and index futures by FIIs are not as large as of now. They are nibbling and have in the past quickly turned as well with the market.
So we have to see not only a sustained flow but larger numbers to think that the commitment level has changed. Their net position in index futures is not more than 5-6k contracts which are almost nothing.
Positions have been moving from long to short in index futures for the last two months without major commitments. So it is not a trend yet.
Q) Any big trends you are picking up in terms of stocks or sectors which are looking attractive?
A) Two sectors are holding out. Sugar stocks have done well in the near term supported by better sugar prices and recent government announcements. Sugar stocks are looking positive and the trend can continue in the election season.
The second sector that has broken out last week is oil marketing companies. OMCs fell sharply last year as the government measures but now all of that discounted lower Oil prices could be a positive trigger going ahead.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.