Since the medium-term cycle seems to have turned, even for midcap stocks, we might see bull phase irrespective of the results of the general elections, says Rajat Bose of rajatkbose.com in an interview to Moneycontrol's Sandip Das.
Edited excerpt:
Q) Both Sensex and Nifty hit fresh record highs in the run-up to elections but the momentum has fizzled out. What are the charts telling you?
A) It is too early to say that the momentum has fizzled out. Till such time the Nifty falls below the 11,300-mark and the 29,430-mark for the Bank Nifty we can't say that the market is displaying any significant loss of momentum.
Moreover, if a fall on a particular day is not greeted by similar selling on the following day, and buying reemerging with full gusto, we would be jumping the gun if we say that the upward momentum has fizzled out.
Q) What is the target for Sensex and Nifty for FY20?
A) I would like to watch the results of the general elections first and then project for FY20. The general trend, however, is expected to remain bullish.
Q) Crude oil prices hit a fresh 5-month high. What are the charts telling you about the trajectory for the next 6 months?
A) Unless Nymex WTI Crude falls below the USD 59-mark decisively, it may continue to climb higher while the range between USD 64 and USD 67 may act as a strong supply zone. Staying above USD 67-level could bring in fresh gumption for the bulls.
Q) Any stocks which investors can look at that recently displayed signs of a breakout any why?
A) There are quite a few stocks that are rising from the bottom. To start with, let's take Maruti Suzuki, it has, most likely, formed a double bottom around the Rs 6,400-level, and is moving up further. In fact, the whole auto sector stocks seem to be displaying early signs of bottoming out.
Similarly, Indiabulls Real Estate has given a major breakout above the supply zone between Rs 93 and Rs 96, which has so far acted as a cap, for this stock appears to have taken out the above mentioned supply zone decisively with record volume-based buying in the wake of the news of probable stock-specific positive fundamental development.
(Disclosure: I hold some shares of Indiabulls Real Estate in my personal investment portfolio)
Q) What should be the investor strategy ahead of elections?
A) In Indian equity market, bear runs do not last beyond 14 to 18 months. It appears that we are in the early stages of a bullish phase but, as usual, very few can trust this upswing, especially keeping in mind the impending general elections.
However, since the medium-term cycle seems to have turned, even for midcap stocks, we might see the bull phase irrespective of the results of the general election.
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