The rupee depreciation against the dollar by a couple of percent last week will certainly put psychological pressure on the Nifty but if investors are looking for stock-specific action, they should stick to Mid-caps and Small-Caps which are outperforming, Brijesh Bhatia - Senior Research Analyst, Equitymaster said in an interview with Moneycontrol’s Kshitij Anand.
Q) It has been a volatile week for Indian markets after a holiday-shortened week. The Nifty closed flat-to-positive. What led to the price action?
A) BFSI and Auto stocks dragged Nifty50 last week which constituents approx. 40 percent and 5 percent respectively of the index.
Bank Nifty has been underperforming against the Nifty for straight six weeks and without banking stocks turning the tide, Nifty will struggle to perform.
On the other hand, Small-Cap Index has hit a new 52-week high and Mid-Cap is shy away from hitting new all-time high, the real money-making opportunities are there where no one focuses.
Q) Sectorally, one sector which stood out was the metal sector. Lot of stocks in the metals index hit a fresh 52-week high. What led to the price action and how should investors play the theme? Any stocks which are still looking attractive?
B) We have seen a stellar performance by Metals in the last couple of weeks and it is unstoppable. Yes, 2021 is the year of Metals and investors should not miss the theme.
Look at the Copper and other metals prices, they are in a strong bullish trend which is beneficial for metals stock.
I believe this is just the start for Metal’s stock, a long way to go for this sector.
Q) What should investors watch out for in the coming week?
A) The rupee depreciation against the dollar by a couple of percent last week will certainly put psychological pressure on the Nifty but if investors are looking for stock-specific action, they should stick to Mid-caps and Small-Caps which are outperforming.
Q) How is market likely to pan out in the coming week? Important levels to watch out for Nifty?
A) The technical structure for Nifty is still bullish as it is trending above 12 months rising trendline and 50-days Exponential Moving Average (EMA).
The slope of RSI has northwards signaling bulls are in control. The cross above 15,000 will accelerate the bullish momentum towards a new all-time high.
Q) Small & midcaps outperformed – what is leading to the price action?
A) We are in the Euphoria phase of the market where Mid-Cap and Small-Cap outperform by huge margins.
Remember an outperformance of the Mid-Cap and Small-Cap index from 2014 to 2018, a similar structure is in place and investors should not miss the next couple of years of wealth creation from these stocks.
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