Samvat 2077 may not be a straightforward affair, it is going to be extremely volatile like the year gone by, and we are expecting the ongoing up move to face some firm headwinds around the 13,590-13,756 zone where we may have to re-evaluate the performance, Sacchitanand Uttekar, DVP – Technical (Equity), Tradebulls Securities said in an interview with Moneycontrol’s Kshitij Anand.
Q) A volatile week for Indian markets. Fresh record highs in the run-up to Diwali then some mild profit taking in the second half of the week. What led to the price action?
A) Festive cheer continued as the index registered fresh life high at 12828 on the auspicious day of Mahurat trading. Sector rotation has been good as private banks & NBFC continue to do well while defensives like FMCG, Phrama, IT have again started showing signs of up move post their respective consolidation & corrective moves.
The vaccine news kept the US stocks trending higher which was also witnessed in our markets as both remain upbeat despite the growing cases reported in the US.
It seems like investors across the globe seem to be weighing out the worsening COVID cases against the hopes of big stimulus package announcements.
Q) Small & midcaps underperform in the week gone by. What is your outlook on the broader market? Does it look like FIIs favoured quality largecaps more than mid and smallcaps? What are your views?
A) The Nifty50 ended the week on a strong note with a gain of more than 4% W-o-W. Bullish momentum retained throughout the week despite the strong run-up which was witnessed in its prior week.
Excluding media and FMCG, all sectoral indices witnessed a power-packed performance while broader indices outperformed the benchmarks too.
The rally was adequately fuelled up by FII participation as the large & quality midcaps continued to attract strong inflows. FIIs have made a strong comeback last month despite the event uncertainty due to elections.
The flows have been consistent, and remain strong going into the festive season too as month till date they have added another Rs 33,232 cr to their tally despite the strong inflows of October.
With most of the mega-cap companies showing sustained bullish trends, it is likely that the inflows could remain constant until December.
Q) What is the outlook for markets for the coming week? Any important data to watch out that is likely to impact the sentiment?
A) Recent breakout from the ‘Flag Pattern’ formation was led by a Break-Away gap followed by a Run-Away gap while the Exhaustion gap is still awaited for termination of this ongoing sequence.
One of the pattern targets has been achieved at 12760 while 13090 could be witnessed alongside the festive cheer.
Hence, soon the risk-to-reward for any further fresh longs could prove detrimental, since markets have entered the overbought zone existing positions could be held on with a trail stop mechanism as there are no signs of reversal or exhaustion yet.
The sectoral rotation would remain the key for the ongoing major up move to progress well while the focus stays on quality & mega-caps to lead from the front. The only caution data set could be the global numbers.
Q) What is your outlook on markets for SAMVAT 2077?
A) Samvat 2077 may not be a straightforward affair or it is going to be extremely volatile like the year gone by. We are expecting the ongoing up move to face some firm headwinds around the 13590 to 13756 zone where we may have to re-evaluate the performance.
Hence, we are expecting some elevated support band for the Samvat 2077 & more of a broad consolidation post the stellar up move which has been witnessed so far.
Liquidity tap remains open as its abundance would keep flowing into quality across the globe as themes remain centric towards the pandemic situation.
While the focus would remain on expectations of earnings momentum to continue & how swiftly the vaccination process re-establishes the confidence within the global economies.
Q) Which sectors are likely to hog the limelight in SAMVAT 2077 and why?
A) IT could continue its leadership due to e-commerce & digital technology, Banking & financials especially NBFC & Pharma especially the Biotech led firms should continue to do well.
Second inline could be logistics, gas, metals & consumer durables which could also perform well in line with the progress of the vaccination process which would be the key to re-establish the confidence back within the economy for much robust growth.
Q) Your 3-5 SAMVAT picks with long term time horizon?
A) Here is a list of stocks for SAMVAT 2077:
TCS: Buy| Target: Rs 3060
TCS has maintained its secular up move. The momentum from the breakout from its 9 quarters of consolidation is yet to witness any signs of weakness.
On its weekly scale, we are witnessing yet another bullish pennant formation while the occurrence of consecutive bullish hammers is a good sign of strength. Overall we expect the stock to scale towards Rs 3,060 level during the upcoming Samvat.
HDFC Life Insurance Company: Buy| Target: Rs 735
On a broader scale, the expanding upward channel rage is placed around Rs 735 which also coincides with its recent bullish pennant formation. Its weekly ADX has moved above 25 almost after 2 years which complements the bullish setup.
Advanced Enzyme Technologies Ltd: Buy| Target: Rs 455
On its long term scale, the ongoing Rounding bottom pattern formation is progressing well. The recent bullish hammer on its weekly scale marked the termination of its intermediate corrective wave.
We expect the stock to continue the up move beyond Rs 455 zone in the coming years, and hence it would still be accumulated.Disclaimer
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