Nirali Shah of Samco Securities explains why Realty & Consumer Durable stocks grabbed spotlight in first week of June

With a mildly bullish trend visible in the markets, indices can continue to maintain their current trajectory going ahead. Nifty50 has immediate support at 15350, said Shah in an interview with Moneycontrol.

June 05, 2021 / 12:17 PM IST

Realty has been a late entrant to the party, nevertheless, it has come in strong. Robust Q4 sales numbers driven by low-interest rates, liquidity & reasonable rates have indicated strength in the sector, said Nirali Shah, Head of Equity Research, Samco Securities said in an interview with Moneycontrol’s Kshitij Anand. Edited excerpts:

Q) A historic week for Indian markets in which Nifty50 surpassed crucial 15,700 levels but failed to close above the same towards the close of the week. What led to the price action?

A) Indian markets attained record levels primarily driven by positive macro-economic data released during the week.

While the GDP de-growth came in at 7.3 percent for the year, it ended up being much better than what the Street estimated.

Along with this, even the core sector index grew by 56.1 percent on a year-on-year basis which again indicated that the impact of the second wave was lesser than the last year.

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As investors put concerns around inflation behind, the markets rejoiced on positive economic numbers and delivered record performance.

Q) The Nifty after hitting a record high of 15733 on Friday saw profit booking post RBI policy. Can we say that we might have hit a top? Are there any signs on the chart?

A) As Nifty50 hit a record high earlier in the week, mild corrections cannot be ruled out as some traders rush to book profits at higher levels.

Having said that, between the bulls and bear,s it seems the bulls could still remain in charge as Nifty50 just crossed its major rising channel support and continues to trade around those levels.

The market breadth could remain positive in the coming week. Overall, traders can keep a mildly bullish bias and position themselves to benefit accordingly.

Q) Sectorally, BSE Realty and Consumer Durable were among the top gainers in the week gone by. What led to the price action?

A) Following the infra-focused Budget back in February, a number of ancillary sectors including basic raw materials such as steel, cement, paints have been on a rally.

Even Nifty Infra witnessed an upward push as it went on to achieve multi-year highs in excess of 4400 levels.

Compared to the various development themes playing out, Realty has been a late entrant to the party, nevertheless, it has come in strong. Robust Q4 sales numbers driven by low-interest rates, liquidity & reasonable rates have indicated strength in the sector.

This has propelled confidence among retail investors to plunge into the real estate sector. Consumer Durables started seeing demand uptick as consumers switched from essentials-only to durables due to the easing of lockdown restrictions.

Q) Which are the important levels that one should track in the coming week on Nifty?

A) With a mildly bullish trend visible in the markets, indices can continue to maintain their current trajectory going ahead. The Nifty50 has immediate support at 15350.

Q) Small & midcaps have outperformed. What is fuelling a rally in the broader market space?

A) In a bull market when there is growth all around, investors turn towards the small and midcap sectors which can provide higher returns compared to the largecap stocks.

While in a bear market, investors first run to sell the small and midcaps causing them to crash compared to the stable names, aka the large caps. This potential upside from the broader stocks is what is attracting investors and fuelling the rally.

Q) What are your top investment bets as markets trade in unchartered territory?

A) With the post-second wave recovery in place, stocks that are consumer-centric and sectors that were slow (underperformed) in the past few months could pick up the pace.

As consumer spending towards discretionary items recovers, those stocks can see traction. Autos have also been down and out, so some of them can pick up steam.

PSU stocks such as Gail, Coal India etc. will remain in focus as their Q4 numbers are still awaited.

RBI has announced a separate liquidity window for hard-hit, impact sectors such as travel and tourism which can see momentum.

Investors can pick and choose stocks from different sectors but they should make sure the companies have clean financials in order to prevent losses due to any negative surprises.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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