In the short-term markets may get rattled with such strikes, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said.
Historically, such attacks failed to derail the markets over a long time horizon. But, in the short-term, they may get rattled with such strikes, Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in said in an exclusive interview with Moneycontrol’s Kshitij Anand.
Should markets be worried about the recent attack on Syria by the US?
Historically, such attacks failed to derail the markets over a long time horizon. But, in the short-term, they may get rattled with such strikes. Hence, in other words, we can say that such incidents may provide a great buying opportunity for long-term investors.
Besides, this information was already in public domain as President Donald Trump had tweeted about the possibility of strikes on Syria last Wednesday itself. The Dow and S&P both reacted with less than one percent fall.
Unless this military conflict escalates the into something big by dragging other nations like Russia or Iran taking the support of Syria, the market may not see worst conditions going forward.
Technically speaking, Indian markets are on a sustainable pull back mode as they are breaching critical resistance points on the upside.
As of now, it appears that market shall find buyers on dips and 10350 itself can act as a strong support. In the worst case, we may go down towards 10100 kind of levels and not more than that because of this issue.
The Nifty rose over 1.4% for the week ended 13 April 2018 despite wild movements in either side. How do you see the market panning out in the coming week?
Yes, for the last three weeks we have seen a strong weekly close from the lows of 9950 level suggesting that at least the trend has reversed in favour of the bulls for time being.
However, we should not forget the fact that market has registered positive closes for the past 7 sessions in a row. Besides this, the breakout is not accompanied by a broad-based participation. In the last three sessions, the market breadth has been negative — a cause of a concern.
Hence, some sort of correction or a pause in the ongoing uptrend can’t be ruled in the early part of next week and the trend shall not favour bears unless 10350 is breached on a closing basis.
Do you think bull market has resumed after 10% of fall as we added around 5% from the lows of 9950?
It will be too early to conclude. In the recent correction, Nifty breached its critical long-term averages which substantially damaged the long-term trend.
The correction was coming after almost 14-months of vertical up move and hence it cannot end in just 2 months. However, by the end of May, if, Nifty were to sustain above 10,500 levels then things may positively shape up on long-term charts.
But, if we trade below 10500 by the end of the May, then technical evidence suggests that Nifty shall remain vulnerable to retest recent lows. Hence, May is going to be a very critical month from this point of view.
Nifty flirted closed above its 200-DMA, and 1oo-DMA in this past week, but there are plenty of stocks which are trading above their long-term average. Are these stocks a value buy at current levels?
Absolutely, the index remained below 200-Day Moving Averages (DMA) only for a couple of days and then recoiled. The problem with long-term trend will arise when indices settle below such long-term averages for quite a longer period of time.
Interestingly, despite Nifty testing its long-term averages some stocks bottomed out ahead of the market sending a message that they reached some sort of ‘value zone’ which naturally attracts the attention of long-term investors.
Despite the carnage witnessed in February and March, some stocks are hitting new lifetime highs. It is a great sign for investors to focus and remain invested in such areas.
What is your call on smallcap and midcap stocks? Should investors stay away or just book profits on rallies?
Small and midcaps are the areas from where real wealth can be created if invested in right opportunities. Hence, focus on this segment should be on companies with good management pedigree and growth visibility.
Hence, we can’t stay away from this segment but the recent correction should only be considered as an opportunity to accumulate good counters from this space as there is a long way to go for this bull market.
What should be the ideal strategy of investors in April series buy on dips or sell on rallies?
The strategy for the current month should be to buy on dips as categorically trend appears to have shifted in favour of the bulls for the near term. Hence, as long as Nifty sustains above 10350 levels on the closing basis one can remain positively biased.
More clues about the strength in the ongoing upmove will be determined by the factors like how long the ensuing correction, if any, will last and how quickly these losses are going to be erased.
If the ensuing fall is going to be bought into quickly with higher top and higher bottom kind of structure, then we will not be surprised to see the current swing eventually getting extended towards 10900 levels as well.
Top 3-5 positional call which could give handsome returns to investors in April series?
Traders can look into following stock specific opportunities for short-term
Dewan Housing Finance: BUY| Target Rs587| Stop Loss 525| Return 7%
This counter which has underperformed in the last leg of up move appears to have resumed its rally after consolidating for the seven sessions in a small band of 545 – 526. Hence, traders can buy into this counter for a target of 587 with a stop below 525 on a closing basis.
Biocon: BUY| Target Rs657| Stop Loss Rs609| Return 5%
Last 4 days of price consolidation is suggesting that this counter is ripe for a breakout above its 2-month old downsloping trendline. The momentum shall once again pick up once it manages such a breakout with a close above 632 levels.
In that scenario, it can head all the way towards its lifetime highs of 657 registered in January 2018. Suggested stop for this trade will be a close Rs609.
Bharat Forge: BUY| Target Rs774| Stop Loss Rs717| Return 5%
This counter is in a consolidation phase for the last couple of sessions in a narrow range of 740 – 730. Once it manages to close above 742 levels then it can witness a sharp spike towards initial targets of 774 levels. Hence, in anticipation, if such a breakout shall go long with a stop below Rs717.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.