The Santa Claus rally must ideally occur in the last 5 days of December and the first 2 days of January, but it is not necessary for the Indian context. It is already begun in India.
With Nifty and Sensex forming new all-time highs, the Indian equity market has received an early Christmas present from Santa, Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:Q) It was a historic week for Indian markets. Do you think the momentum will continue as we step into the last 6 days of 2019?
A) December 2019 has been a historical month for the Indian market with Nifty and BankNifty forming record highs. However, this momentum is unlikely to continue in the last week of the month as we can already see the momentum shrinking in Nifty on a day-to-day basis.
Also, the rally has not been organic as only select names are pushing the indices higher.
Moreover, we feel that buying pressure from biased buyers who have been buying at market highs have helped the market scale new peaks consistently. We have not seen growth in all the stocks, which could be a reason for concern.
Global markets are expected to be range-bound and sideways due to the Christmas break. Divergence in RSI can also be another major hindrance for the continuation of this momentum.
Q) On average, the number of stocks that have hit their 52-week low is almost twice compared to those that have hit their 52-week high. Is it a cause of concern?
A) Yes, it can easily be viewed as a negative sign.
The situation of benchmark indices hitting all-time high and wide divergence between stocks is very peculiar. The Indian indices are currently bloated with only selected stocks performing well, which are driving the main indices towards the higher side. So, we still have some good opportunities in the market to consider.
Q) The week ahead will be a truncated as we approach Christmas Holiday. Can we say that the much talked about Santa Claus rally has already begun as both Nifty and Sensex have formed new all-time highs?
A) The Santa Claus rally must ideally occur in the last 5 days of December and the first 2 days of January, but it is not necessary for the Indian context.
We can say that Indian markets have received an early Christmas present from Santa. This rally of Nifty and Sensex, reaching record highs indicates that Santa Claus rally has already begun.
This rally is a result of substantial rises in index heavyweights such as HDFC Bank, Reliance Industries but stocks-at-large have been trading at lower levels.
Q) With benchmark indices sitting at record highs, can you give us three stocks that are ripe for a breakout and can be considered a good 'buy on dips' stocks?
A) Here is a list of top three stocks which could give 5-8 prcent return in the next 3-4 weeks:
This stock is consolidating just above the support level and is ripe for a breakout and is expected to rise for the next 3 weeks.Hero MotoCorp: Buy at Rs 2,400 | LTP: Rs 2390 | Target: Rs 2,500 | Stop Loss: Rs 2,300 | Upside 5 percent
This stock, after trading in a range for a long time in a downward trend, has given a trendline breakout recently. Therefore, it is a great pick for the next 3 weeks.Ashok Leyland: Buy at Rs 82 | LTP: Rs 80.35 | Target: Rs 86 | Stop Loss: Rs 78| Upside 7 percent
This stock is consolidating just above the support level. Hence, it is a very good buy on dips recommendation for the next 3 weeks.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Subscribe to Moneycontrol Pro's Annual plan for Rs 399/- for the first year. Use coupon PRO2020 (Available on Web & Android only).