We reiterate our stand of not being optimistic on the market rally, but there will be stock-specific movement in the market, Sundar Sanmukhani, Head of Fundamental research desk, Choice Broking, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) It seems like the markets seem to have witnessed profit-taking at higher levels. What led to the sharp sell-off on D-Street and then some recovery towards the close of the week?
A) Till last Thursday, everything was okay, but certain domestic, as well as global developments, brought negativity in the equity markets.
Domestic factors like an extension of the lockdown and the government not coming up with stimulus package, brought nervousness in the market, while the ongoing quarterly results and the management commentary were not encouraging.
Apart from this, the US decision of imposing a new tariff on China in response to the COVID-19 pandemic has brought negativity across the global equity markets.
We reiterate our stand of not being optimistic on the market rally, but here will be stock specific movement in the markets.
Q) Any factors which investors should watch out for in the coming week?
A) There are no major events lined-up next week. But, on the domestic front, earning results will be tracked by the investors next week. On the global front, lockdown relaxation across major economies will be considered.
Any development of the medical solution to the Covid-19 will be taken positively by the investors. Markets are likely to be range-bound over the next few trading sessions.
Q) Another mega-deal in RIL’s Jio platform. What are your views and estimates on the stock, and what should investor’s do – buy, sell or hold?
A) Any news related to funding infusion in debt-laden RIL will be taken positively by the investors. Considering the quantum of funds to be raised in Q1 FY21 and the continued attractiveness of the strategic investors on its technology platforms, the outlook on RIL is positive.
The stock has ran-up already and is expected to be range-bound, till the right issue is executed. Investors are recommended to buy on every dip.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Q) Small & Midcaps outperform in the week gone by. Looks like investors are slowly accumulating beaten down names?
A) The small & midcap have outperformed last week, considering the valuation gap between these and the large-cap stock, we are recommending investors to accumulate large-cap stocks.
If also there is a positive reversal, the rally will be narrow and these large caps will be in demand.
Q) Moody's says India's negative rating outlook reflects a rising risk of slower GDP growth. Do you think this is already factored in or will it weigh on markets and investor decision making?
A) We don’t think the market has fully factored in the lockdown impact on economic growth and that’s why we are not optimistic on the market movement. We are forecasting an economic contraction in FY21.
Q) Do you think lockdown could get extended beyond May 17? If yes, what is the kind of impact it could have on markets?
A) Analyzing the growth in the virus infections across major cities in India, we feel that there will be no pan-India lockdown after 17th May. But major impacted cities would remain in lockdown. This should be taken negatively by the market.
Q) Specialty Chemicals, Pharma best-placed sectors do ride out of COVID-19 storm. But, after a swift rally, are these still a good buy at current levels? What should investors do?
A) Not confident about the specialty chemicals rally, but pharma rally seems to get extended in these uncertain times. Thus investors are recommended to remain invested in the pharma stocks.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their 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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