Remain stock-specific as Nifty is likely to consolidate in 11,100-11,700 range this week

Jayant Manglik, President, Religare Broking, expects the Nifty to further consolidate between 11,100 and 11,700 this week. Edited excerpts:

Q) A volatile week for equity markets, but it closed negative for the week-ended September 14. What is the outlook for the coming week?
A) It is a normal corrective phase. We expect further consolidation in the Nifty between 11,100 and 11,700 this week. We advise keeping hedged positions and suggest maintaining a stock-specific trading approach.

Q) How is the Bank Nifty looking on a weekly as well as daily charts?
A) The Bank Nifty is currently underperforming the benchmark index but it still has some room for a further recovery. However, it trades largely in line with the Nifty, so a consolidation is more likely in the near future. We prefer private banking majors over their PSU counterparts for long trades.

Q) What is your call on the rupee? Do you see the currency drifting lower this week? A) After testing record lows of Rs 72.90 per dollar, the rupee is likely to recover somewhat in the near-term, owing to the recent slide in the Dollar Index to six-week lows, recovery in emerging market currencies and positive inflation data on the domestic front. Also, the government is contemplating certain fiscal and monetary steps to stem the fall in the dollar-rupee, which can provide some breather to the local unit. The rupee faces immediate resistance at Rs 71.50 per dollar. Once that is breached, we expect it to appreciate close to the Rs 70.80 per dollar mark.

Q) What is your call in the small and midcap space as individual stocks have suffered in the last one-month due to foreign selling and depreciation in the dollar-rupee? A) The broader markets indices have been underperforming for the last six months and there’s no sign of any meaningful reversal yet. Only a handful of stocks participates during the upmove, while majority witness sharp decline with every fall in the benchmark index.

Unfortunately, indications are pointing toward continuous underperformance ahead. Thus, we advise extra caution ahead while selecting stocks in the small and midcap space.

Q) Any stocks that investors can look at for a period of one-month? A) Here is a list of three stocks that could return 4-6% in the next 1 month: