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Last Updated : Nov 26, 2019 01:54 PM IST | Source: Moneycontrol.com

'Nifty may witness profit-taking this week, but prevailing trend should continue'

We are seeing indications of short term up move in select PSU banks but we still recommend preferring private banks over the PSU pack for the long term investment.

Sunil Shankar Matkar
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Todays L/H

We’re seeing a strong possibility of profit-taking in the benchmark index next week and expect Nifty to find support around 11,850-11,750 zone. In case of any rebound, sustainability above 12,000 would be difficult, Ajit Mishra, VP Research, Religare Broking said in an exclusive interview to Moneycontrol's Sunil Shankar Matkar.

edited excerpts:

Q: Lot of buying has taken place in several under-owned stocks within the pharma and PSU Bank sector this week. Which stocks do you think can attract buying interest in the weeks to come?


Selective buying was witnessed in the PSU banks and pharma pack last week however indications are in the favour of rebound to extend further. Besides, media also surged strongly, thanks to a sharp recovery in Zee Limited. Apart from these sectors, we’ve seen some buying interest emerging in metal and realty space too. However, we suggest keeping extra caution while selecting stocks from these sectors, considering their overall trend. Amongst these under-owned sectors, we feel stocks like Tata Steel, JSW Steel, Bank of Baroda and Lupin have potential to positively surprise the participants in the near future.

Q: What are your thoughts on the market after Sensex and Nifty hit record highs?

The sharp surge in the Nifty on Monday negated the possibility of profit-taking and today it has made a new record high. In line with the benchmark index, banking too showed noticeable strength and tested its all-time high. Importantly, we’re seeing other sectoral indices also participating in the up move which is further adding to the buoyancy.

We’re now eyeing 12,300+ levels in Nifty since it’s trading in an up-trending channel on the weekly chart and the upper band of the same exists around that zone. We suggest continuing with “buy on dips” approach and focusing more on stock selection. The under-owned sectors viz. pharma, metal and PSU banks can positively surprise the participations in the near future.

Q: Asset management companies like HDFC AMC and Reliance Nippon continued to hit life highs. Do you still feel these stocks have a lot of potential upside and why?

Both these companies have seen a considerable up move in the last year led by improved market sentiments and better than expected earnings. While we do believe that further upside cannot be ruled if the market continues its upward march, but the risk-reward ratio is not favourable for investors looking for fresh investment. One should hold the stock and fresh investment can be made on dips and not at the current market price.

Q: The market so far traded with 0.3 percent gains in November series. Do you expect the Nifty to end series above 12,000 and what are your expectations about December series?

As quoted above, we expect Nifty to witness some profit-taking during the week. However, we believe the prevailing trend can extend proceed further. After the recent surge in the banking index, we might see the banking majors taking a breather and index heavyweights from others sectors viz. energy, FMCG and metal can push the index higher and help benchmark to make a new record high in December month.

Q: As an investor, will you start investing in PSU banks over private banks after Essar Steel case resolution?

Essar Steel was among the big-ticket NPA case and quite a few PSU banks have exposure to the same. The Supreme Court ruling has paved way for these banks to recover around 80-90 percent of their dues. We are seeing indications of short term up move in select PSU banks but we still recommend preferring private banks over the PSU pack for the long term investment.

Q: Is it the right time to buy telecom stocks especially after the government's assurance of keeping three private players and one public sector player?

We’ve already seen a sharp surge in the stock prices of listed telecom companies of late, mainly in reaction to the recent developments viz. tariff hike by the players and deferment of spectrum payment. However, structural issues such as price wars and competitive intensity, as well as, pending AGR dues will continue to haunt the pure-play telecom stocks.

Among all, we feel Reliance (Jio) is better placed as it has less spectrum and AGR dues and comparatively better financial position supported by a continuous rise in market share.

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.

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First Published on Nov 26, 2019 01:54 pm