Small and mid-cap space can be looked into as it seems to be ripe for breakout and investors can include these stocks into their portfolio for medium to long term, Gaurav Garg, Head of Research at CapitalVia Global Research Limited, says in an interview with Moneycontrol’s Kshitij Anand. Edited excerpts
Q) The week gone by was controlled by the bulls as the Nifty managed to climb above 11,900. What led to the price action on D-Street?
A) The week started with a gap up on Monday (October 19) and continued the same for a couple of days but in the middle of the week, the Nifty plunged to 11,775 from 12,000, which is a big psychological level. The Nifty witnessed profit-booking at the level of 12,000.
The Nifty continued its volatility on all the trading days during the week, which might have been triggered by Q2 results. Although the Nifty closed the week above 11,900, there is an indecisiveness in the market as it has formed a Doji pattern on weekly charts.
Q) We are in the last week of October, which is also the expiry week. Which are the important levels that one should be tracking? Any important event to watch out for during the week?
A) On a weekly basis, the Nifty50 has formed a Doji pattern, which indicates an indecisiveness in the market. A clear direction will emerge only if we get past 12,050 on the upside or break 11,650 on the downside.
Investors should remain cautious and avoid aggressive longs ahead of important corporate results. The ideal strategy for investors could be to trade long above the level of 12,050, as it could push the market towards 12,300–12,400 levels.
Q) Even though benchmark indices moved in a range, we saw bigger price action in small and midcaps. What are your views on the broader market? Small & midcaps have usually performed better in the run-up to Diwali and the December quarter.
A) The Nifty50 witnessed profit-booking at the level of 12,000 and is expected to remain so for upcoming sessions.
The results of many large caps did not meet investors’ expectations and therefore, it would take considerable strength to break the level of 12,000. It has been seen that small and mid-caps perform better in the Diwali season and the December quarter. Therefore, one can look into this segment as this space seems to be ripe for breakout and investors may include these stocks in their portfolio for the medium to long term.
Q) Sectors like realty, telecom and metal led the action on D-Street. What were the factors at play?
A) The hike in steel prices and the gradual recovery in demand along with positive expectations regarding quarterly results have aided the price surge. The festival season is expected to boost this sector and from the past few months, this sector has been showing recovery.
The future sentiment score for the next six months has crossed 50, which shows optimism. Moreover, properties seem to be available for reasonable valuations.
The arrival of 5G technology seems to have sent a positive wave in the market but the increased reach of telecom and rising users and usage may also be the factors leading to the rise of these stocks.
Q) Top technical trading ideas for the next three-four weeks?
A) Here is a list of top trading ideas for the next three-four weeks:
The stock is trading in a consolidation range and any breakout may lead to a bullish trend in these stocks. After consolidating in a narrow range, the stock is ready to witness a resistance breakout from the level of 1,490.
We recommend buying the stock above Rs 1,490 for the target of Rs 1,620, and keep a stop loss at Rs 1,410 on a closing basis.
From the past three weeks, the stock has been forming higher highs and higher lows. We expect the stock to continue the same for the next two-three weeks.
We recommend buying the stock above Rs 1,640 for the target of Rs 1,850, and keep a stop loss at Rs 1,480 on a closing basis.
The stock is trading at its major resistance zone on the daily charts. If it breaks the level of 1,400, then we might witness a strong upside momentum. The stock is sustaining above its important moving averages.
We recommend buying the stock above Rs 1,400 for the target of Rs 1,530, and keep a stop loss at Rs 1295 on a closing basis.
The stock had made a recent all-time high of Rs 3,048.00 and had been in the bullish trend. Any breakout above Rs 3,050 might lead to a new high. Further, the stock has taken support from its key moving average.
We recommend buying the stock above Rs 3,050 for the target of Rs 3,500 and keep a stop loss at Rs 2,665 on a closing basis.
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