Testing March lows has higher odds but the journey will be slow, tiring, and frustrating, hence, investors should remain patient and not make rash decisions in their portfolio, Umesh Mehta, Head of Research, Samco Securities, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpts:
Q) What are the main reasons why D-Street did not like the fine print of the Rs 20 lakh cr stimulus package announced by the govt?
A) Stimulus although optically looks large but the fine print shows that it is not on the government’s balance sheet but onto the balance sheet of the distressed sectors and individual pockets, which was not expected.
This may solve the temporary liquidity crises, but solvency concerns are still not addressed in a meaningful way.
Q) Nifty recorded a negative return for the week ended May 15. What led to the fall?
A) International markets and stimulus hopes made a see-saw type rally with gaps on our bourses in the past week. Despite the infusion of Rs. 20 lakh Cr. by the Government, the Street was disappointed which led the markets to bow down to the selling pressure.
Q) For this week as well – both mid & smallcap indices outperformed. Can we say that smart money has started chasing a broader market? Or the move can’t be trusted.
A) Currently, no clear trend is emerging in the small and midcap indices. At best it can be inferred that there is a long sideways view with a downwards bias and lower volatility in the mid and smallcap space.
However, one cannot say with certainty that broader markets are going to witness rosy times ahead. In fact, there is a higher possibility for frustrating periods going forward.
Q) The index is consistently facing resistance around 9400 levels – do you think we could retest March lows again?
A) Testing March lows has higher odds but the journey will be slow, tiring and frustrating. Hence, investors should remain patient and not make rash decisions in their portfolio.
Q) Any important events which investors should watch out for the coming week? Also, important levels on Nifty which one should track?
A) How other countries are coming out of lockdown, how businesses start responding, how consumer habits are changing, and how quickly medicinal cures will be made available are all important pointers that will eventually lead the direction of the markets going forward. The Nifty50 below 8900 will lead to a fresh fall and resistance above 9500 is strong.
Q) Any 2-3 stocks that are breakout buys which investors could look at in the coming week?
A) The pharma sector is consolidating and correcting, breakouts in this space should be observed. However, currently, none are visible.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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