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Traders rollover bullish bets in March series; Nifty likely to get support near 13800: Likhita Chepa of CapitalVia Global Research

Investors are likely to keep an eye on bond yields, commodity prices and global cues as these may affect the short-term trend of the market, says Chepa.

February 28, 2021 / 01:57 PM IST
 
 
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One can expect more of FII buying ahead on the back of improving economic data. F&O monthly roll-over data also looks supportive as investors have maintained their bullish stance, Likhita Chepa, Senior Research Analyst at CapitalVia Global Research Limited, said in an interview with Moneycontrol’s Kshitij Anand.

edited excerpts:

Q) Nifty50 consolidated this week but bulls failed to hold on to gains. What led to the price action?

A) Although the Nifty started the week on a weaker note, it tried to bounce back and sustained above its psychological level of 15,000 for most of the week. However, the benchmark index failed to hold its strength as bears took control over the markets on the last trading session of the week following the global cues.

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Rising bond yields, higher oil prices, and the US’s attack on Syria triggered the sentiments of the investors globally and led to a sell-off. With the Nifty50 breaching its immediate support levels, investors are advised to maintain a cautious stance.

Q) The big cause of worry for equity markets is the rise in US Bond Treasury yields which have surpassed S&P 500 Dividend Yields. Does it mean that high-flying equities have a competitor now at a relatively low risk? How does it impact Indian markets?

A) The stellar performance by the equity markets in the past few months has been mainly due to the increased liquidity in the markets due to the expansionary policies of central banks across the world.

But, the rising yields are giving an impression that this accommodative stance is going to be changed sooner than anticipated. Indian 10-year Bond yields have also risen which is not good news for the markets.

The valuations of equity might get affected as the discounting factor which is the cost of capital will rise and reduce the valuations.

Q) The December quarter GDP data will be out later on Friday. Your first take on the data? Your key takeaways for investors based on the data? Does it mean that investors should focus on Economy-related stocks?

A) The December quarter GDP data reported 0.4% growth thereby pulling out the economy from the recession. The growth in Manufacturing, Real estate, and Financial sectors seems promising and the growth of 2.6 percent in the fixed capital formation seems positive along with impending revival and growth of the core sector. Following stocks may have an advantage in the present scenario.

We like stocks such as:

Godrej Properties: Buy above Rs 1565, Stop Loss Rs 1490, Target Rs 1674

Ashok Leyland: Buy above Rs 131.80, Stop Loss: Rs 116, Target Rs 151.50

Muthoot Finance: Buy above Rs 1362, Stop Loss: Rs 1260, Target Rs 1480

Q) Crude oil is also trading above $60/barrel. Which stocks are likely to benefit the most and which ones could remain under pressure and why?

A) The main benefit of the rising crude prices would be to the Exploration and Manufacturers of Petroleum and Gas products like ONGC, GAIL, Petronet, and the OMCs.

Tyre manufacturers and Chemical stocks may be in pressure because the input prices may rise for them thereby increasing the overall cost of the products.

Stocks like BPCL, Apollo Tyres, and Asian paints may witness some selling pressure in the near term.

Q) Based on the February series expiry – how is the March series likely to an out. What is the target you see for the March series and important factors or data points to watch out for?

A) The benchmark indices gained more than 8 percent in the February series. The broader market indices outperformed the benchmark indices by gaining more than 11 percent each.

One can expect more of FII buying ahead on the back of improving economic data. F&O monthly roll over data also looks supportive as investors have maintained their bullish stance.

Investors are likely to keep an eye on bond yields, commodity prices and global cues as these may affect the short-term trend of the market.

However, this should not pose much worry to the investors as rising bond yields are an indication of a better growth outlook which could be beneficial to the equity markets.

Going ahead, Nifty is likely to see support at 13,800 while it may face resistance around the 15,250 – 15,300 zone.

Q) Your 3-5 trading ideas for the next 3-4 weeks?

A) Here is a list of short term trading ideas for the next 3-4 weeks:

Wockhardt: Buy | LTP: Rs 500.90 | Buy above Rs 523 | Target: Rs 598 |Stop Loss: Rs 470 | Upside 19%

This stock is trading above its 21 50, & 200-Days EMAs, and the key indicators are indicating strength for a positive movement in the stock. The stock has been in a strong consolidation phase.

Any breakout above the level of Rs 523 would add further upward momentum to the stock. Therefore, we recommend initiating a buy position above Rs 523 with a stop loss of Rs 470 and a target of Rs 598.

KEC International: Buy | LTP: Rs 430 | Buy above Rs 445 | Target: Rs 500 | Stop Loss: Rs 405 | Upside 12%

This stock is forming a strong resistance around Rs 445 and Momentum Oscillator RSI are showing positive strength in the stock. It is trading above its important moving averages with a positive crossover.

Any breakout above the level of Rs 445 would add further upward momentum to the stock. Therefore, we recommend initiating a buy position above Rs 445 with a stop loss of Rs 405 and a target of Rs 500.

Tata Motors: Buy | LTP: Rs 323 | Buy above Rs 342 | Target: Rs 440 | Stop Loss: Rs 299| Upside 28%

This stock has been forming higher highs formation on the monthly charts and has given a major breakout recently. It is trading above its important moving averages and we expect the rally to continue.

Any breakout above the level of Rs 342 would add further upward momentum to the stock. Therefore, we recommend initiating a buy position above Rs 342 with a stop loss of Rs 299 and a target of Rs 440.

Disclaimer: The views and investment tips expressed by 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

 
Kshitij Anand is the Editor Markets at Moneycontrol.

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