Post-budget, infra and real estate stocks worth a look, says Nirali Shah of Samco Securities

After the excitement of the Budget, which sent Indian shares zooming, the market seems to be taking a breather, Nirali Shah, Head of Equity Research, Samco Securities, has said.

The open interest (OI) in many largecap stocks has halved from their peak seen in the October-November, which indicates that traders are wary of keeping their positions open in futures and commit at such elevated levels, Shah says in an interview to Moneycontrol’s Kshitij Anand. Edited excerpts:

Q) It was a week of consolidation for Indian markets but the good part is that there was a lot of buying support at lower levels. What led to the price action?

A) The Budget week was filled with excitement, spillover effects of which were felt in the first half of this week, with the Nifty touching lifetime highs of 15,257. Since most major events have already been factored in, markets have taken a breather.

The open interest (OI) in many largecaps has also halved from their peaks in Oct-Nov’2020, which could indicate that traders are wary of keeping their positions open in futures and commit at such elevated levels.

Domestic Institutional Investors (DIIs) have been net sellers again this week and the indecisiveness between the bulls and the bears to take charge has led markets to move in a tight range.

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Q) Small & midcaps also consolidated but overall they remained fairly stable. What led to the price action and any interesting stock charts you are seeing in the broader market space?

A) The Nifty mid & smallcap indices mainly imitated the benchmark index and took sometime off after their steady rise during the Budget week.

The lack of action can be because of major events having been discounted for but there are still pockets of stocks and sectors, which have upside their way from a longer-term perspective.

Since the Budget was gung-ho on infra and affordable housing themes, quality stocks from these two sectors can be added to an investor’s shopping bag.

Midcap financials could also witness growth post their robust Q3 performance. Investors should therefore keep their watchlist ready and enter on dips in this range-bound market.

Q) Which are the important levels that one should track in the coming week for the Nifty and the Nifty Bank? Data points that one should watch out for?

A) The Nifty50 traded in a narrow range throughout the week. While there was a constant push-and-pull action between the bulls and the bears, none seemed to have gotten a grip on the same to drive the index.

Indices have entered short-term overbought levels, resulting in the bulls becoming softer, while the bears try to take control.

The market is now constrained within the immediate support and resistance of 14,970 and 15,250 on the Nifty50 and a breakout on either side will determine the trend for the upcoming week.

Q) Please suggest 3-5 trading ideas for the next 3-4 weeks with the target, and stop-loss along with rationale?
A) Next week could see a knee-jerk reaction in certain stocks such as Ambuja Cements and Nestle because of Q3 results. As the earnings season is almost in its last leg, there are a couple of themes investors can consider.

Commodities and base metal manufacturers could remain in momentum, while IT stocks can continue to remain in focus given there is some room for an upside.

Realty stocks can also continue to remain in limelight as the real estate market recovers aided by supportive measures by the government and favourable interest rates making buying a house more viable for the first-time home buyers.

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