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Last Updated : Dec 22, 2019 11:25 AM IST | Source: Moneycontrol.com

Sit tight! A catch-up rally in mid & small-caps and beaten-down large-caps in 2020

Three stocks that are ripe for break out are the State Bank of India, Escorts and Petronet LNG, according to Rusmik Oza, Sr. VP & Head of Fundamental Research at Kotak Securities

This year was an eventful one for the markets as they saw touched record highs multiple times. Major events that shaped the market this year include the comeback of Narendra Modi as the prime minister, the 2019 Union Budget and the Finance Ministry's decision to cut corporate tax rates. The market witnessed a bull run after these events, which ultimately helped it end the year at an all-time high. Despite the market rally, the bull run of 2019 has been termed as one of the most-hated rallies as it witnessed several downs as well. Read on to know the worst intraday shocks felt by the Sensex as of December 13. (Image: Moneycontrol)
This year was an eventful one for the markets as they saw touched record highs multiple times. Major events that shaped the market this year include the comeback of Narendra Modi as the prime minister, the 2019 Union Budget and the Finance Ministry's decision to cut corporate tax rates. The market witnessed a bull run after these events, which ultimately helped it end the year at an all-time high. Despite the market rally, the bull run of 2019 has been termed as one of the most-hated rallies as it witnessed several downs as well. Read on to know the worst intraday shocks felt by the Sensex as of December 13. (Image: Moneycontrol)
 
 
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The Nifty50 has broken out from the previous peak and is trading at fresh highs. We feel that the Nifty50 could see resistance closer to 12,300 levels, and should trade in a range between 12,000 and 12,300 levels till the end of December 2019, Rusmik Oza, Sr. VP & Head of Fundamental Research at Kotak Securities, said in an interview with Moneycontrol’s Kshitij Anand.

Q) A historic week for Indian markets. Do you think the momentum will continue as we step into the final six days of 2019?

A) The Nifty50 has broken out from the previous peak and is trading at fresh highs. We feel that the Nifty50 could see resistance closer to 12,300 levels, and should trade in a range between 12,000 and 12,300 levels till the end of December 2019. It is possible for the index to breakout above 12,300 in January 2020 on the back of a potential pre-budget rally.

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Q) We have seen a wide divergence between the stocks which are hitting a 52-week low. On average there are almost double the stocks that have hit a 52-week low as compared to stocks that hit 52-week high? Does this bother you?

A) We are not so bothered by the polarisation of the market as this could throw the opportunity to make money in many beaten-down stocks in 2020. This year’s rally has been driven by FPIs and has been restricted to mainly large-cap stocks.

Even within Nifty50, the rally is very concentrated in the top 15-20 companies in terms of market capitalization. For example, in CY19 till date, only 16 stocks within Nifty50 have beaten the index whereas there are 23 stocks with absolute negative returns.

As Nifty50 trades into a new zone, we could see a catch-up in the mid & small-caps and also many beaten down large-caps in 2020.

Q) The coming week will be truncated as we approach the Christmas holiday. Can we say that the much talked about Santa Claus rally has already begun? Santa has already given the gift to D-Street with Sensex and Nifty touching record highs?

A) The convergence of positive news flows has led to a year-end rally in global and domestic equity markets. After infusing $5 billion in October, and November, FPI flows have slowed down to $477 million in December.

As we go into the last week of December 2019, FPI activity will further slowdown which could lead to some pause in the market.

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? Please mention the time frame with the call.

A) Three stocks that are ripe for break out are SBI (12 month Fair Value of Rs 400), Escorts (12 month Fair Value of Rs 1,030) and Petronet LNG (12 month Fair Value of Rs 320)

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.



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First Published on Dec 22, 2019 10:30 am
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