The progress of monsoon would be actively tracked by traders and investors. Further, the earnings announcement by companies is likely to lead to stock-specific volatility.
The progress of monsoon would be actively tracked by traders and investors. Further, earnings announcement by companies is likely to lead to stock-specific volatility, Ajit Mishra, Vice President, Research, Religare Broking Ltd, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:Q: Where do you see Nifty this week?
A: The market is expected to remain choppy in the backdrop of weak domestic sentiments given on-going economic slowdown in the week. The monsoon has shown considerable improvement over the past 1-2 weeks which is positive for the Indian economy.
However, the progress of monsoon would be actively tracked by traders and investors. Further, the earnings announcement by companies is likely to lead to stock-specific volatility.
On the global front, on-going geopolitical tensions between US-Iran could have a bearing on Indian markets as crude price has inched higher and is likely to keep the market participants on edge.
Technically, Nifty is trading under pressure and has got a stiff resistance at 11,600. On charts, indications are still in favour of further consolidation. For this week, Nifty is expected to be in the range of 11,400-11,800.Q: What are the important trigger to watch out this week? Alos, post their Q1 show, what is your view on TCS and Infosys?
A: In the coming week investors focus would be on the on-going corporate earnings season, WPI data and the geopolitical tensions between US-Iran.
Besides, they would actively track the progress of monsoon as it has shown considerable improvement over the past 1-2 weeks, which is positive for the Indian economy.
Further, these factors would influence market participant’s sentiments in the coming week. Infosys has delivered encouraging numbers for Q1FY20 on all counts and has increased its revenue growth guidance for FY20.
A: In recent times, the market sentiments have been hurt badly due to the emergence of corporate governance issues. Especially, for companies that have a higher proportion of pledged shares by promoters. Investors have turned cautious, as such counters have been witnessing a free fall in their share prices.
Dismal financial performance along with the struggle to manage the existing debt by high debt-laden companies has compelled their lenders to sell the pledged shares of promoters, thus raising concerns for retail investors.
Hence, to protect the retail investors’ wealth, SEBI’s recent tightening of disclosure norms on pledged shares appears to be encouraging.
Widening the scope of encumbrance by including negative lien and NDUs (Non-Disposal Undertaking) is a welcome move, as it would help in tightening disclosure norms by promoters and result in improved transparency.
We feel investors should strictly avoid investing in all those companies involving a high level of pledging by promoters, as it reflects deteriorating fundamentals along with the company’s inability to raise funds through other viable options. Such stocks could continue to witness high volatility.Q: About 300 BSE500 companies are trading below their 200-DMA. Are they attractive buys at current levels or investors should wait for the trend to reverse?
A: Most of these companies have reported subdued financial performance led by a slowdown or regulatory concerns in their respective sectors. The companies are fundamentally sound but are witnessing challenges currently.
The near term outlook also remains subdued for these companies given the on-going economic slowdown and persistent headwinds for respective companies.
Hence, further correction cannot be ruled out in the given names, but it would be advisable that investors with no exposure to these companies can start accumulating in a phased manner.Q: Adding to the previous question, the trend is strong for 200 stocks. Are they attractive buy ideas?
A: Despite a challenging environment, the above companies have delivered strong financial performance and the stocks have seen considerable up move in the past six months.
We believe that these companies have strong growth prospects and have sound fundamentals and continue to command premium valuations.
However, given the recent run-up, it would be prudent to accumulate these stocks on dips (8-10 percent) as any slowdown in business could lead to some correction in these companies.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.The Great Diwali Discount!
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