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Time for investors to shift from small & midcaps to largecaps: Gaurav Garg of CapitalVia Global Research

The broader market might underperform compared to large caps in the short-term because time-wise correction might be witnessed, says Garg.

August 09, 2021 / 09:30 AM IST
Gaurav garg

Gaurav garg

 
 
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Gaurav Garg, Head of Research at CapitalVia Global Research, said that a large index breakout from the consolidation range of 15,650-15,970 will lead to a rally in largecap as the index might stretch to 16,800 in the next two months.

In an interview to Moneycontrol’s Kshitij Anand, Garg said that the broader market might underperform compared to large caps in the short term because time-wise correction might be witnessed. Edited excerpts:

Q) A historical week for Indian markets as Nifty surpassed 16000 to hit fresh record highs. What led to the price action?

A) The market was trading in the range of 15650-15970 from the last two and half months which was a good duration for any consolidation.

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Now, the Nifty50 has given a resistance breakout and managed to sustain above 16,000 which was long-awaited. Foreign investors (FIIs) are now turning as net buyers in August month, and some short covering action has also led indices higher.

Q) What are your views on broader markets that have hit fresh highs in August? Additionally, small & midcaps have outperformed benchmark indices by a wide margin. How should investors play this theme?

A) The broader market might underperform compared to large caps in the short-term because time-wise correction might be witnessed. Large caps were stuck in a narrow range for the last two months, and now investors should shift to large caps.

The Nifty50 companies posting above expectation results can lead to FII/DII flows to large caps. Also, a large index breakout from the consolidation range of 15650-15970 will lead to a rally in largecap, as the index might stretch to 16,800 in the next two months.

Q) Four IPOs will hit D-Street in the coming week – Care Trade, Nuvoco, Chemplast Sanmar, and Aptus value Housing. If investors want to invest in just 1 IPO which one would be a better bet for the long term and which one will you pick for listing gains?

A) I really like the business model of Car trade, as it is a multi-channel auto platform provider company, for various platforms like CarWale, Shriram Automall, BikeWale, CarTrade Exchange, Adroit Auto, and AutoBiz.

The grey market premium (GMP) is showing a gain of more than 30 percent from the issue price. This IPO might turn out to be a good bet for listing gains as well as for the long term.

Q) The month of July closed with marginal gains but August started off on a flying note. Where do you see markets heading in August – important levels, and events to watch out for. Will August be a month of new high or a market top?

A) August month might trade with a positive note, as the last two months were more of consolidation months and we might cross 16,500 soon.

Lower crude and improving currency might help indices to trade higher. MPC meet which was held on 6th Aug in which status quo was maintained indicates consistent policy stance by the RBI. Non-farm payrolls might be important data to look for this month.

Q) Although a lot has been written on Vodafone, but from a retail investor perspective – there is still plenty of demand for the stock. A) What should investors do who are holding the stock, B) What would you advise traders – or has Vodafone become a trading play and investors deploy only that money which they can afford to lose?

A) Yes, demand is there but will suggest not to stay invested. Investors should avoid investing in this stock as uncertainty might adversely affect Vodafone, as the major tailwind is an intense competition by the two big players.

Any meaningful upside might be used to exit the stock. Bharti Airtel is better placed and investors should choose this stock over Vodafone.

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

A) Following trading ideas might give good returns in next week:

Axis Bank Limited: Buy| Trigger Price: Rs 760| Target price: Rs 800| Stop Loss: Rs 738| Upside 5.26 %

The stock has witnessed a reversal from its support level and further strength might be gained if it sustains above 760. Axis Bank might outperform its private bank peers in the coming weeks.

The crossover of its short and medium-term averages on the daily charts with strong volumes shows signs of further upside.

Hero MotoCorp Limited: Buy| Trigger Price: Rs 2852| Target price: Rs 2950| Stop Loss: Rs 2799| Upside 3.43%

The stock is witnessing a bounce from its important support level. Further, if the stock is able to sustain above 2852 which is the immediate resistance level, it might give a strong bullish breakout. The stock is sustaining above its important moving averages.

Happiest Mind Technology: Buy| Trigger Price: Rs 1430| Target price: Rs 1485| Stop Loss: Rs 1384| Upside 3.84%

The stock is forming a bullish flag pattern, and if the stock sustains above 1430, it will bring positive momentum.

The stock has seen a significant addition of volumes in recent days. The stock is showing strong momentum and in the coming week, it might stretch towards Rs 1500 levels.

Q) What is your view on the RBI policy and how will it impact markets? Can we say that rates have bottomed out? And, how will the commentary impact banking stocks?A) The Reserve Bank of India on Friday kept the benchmark repo rate unchanged at 4 percent while maintaining its "accommodative" stance.

The central bank has also maintained the GDP growth forecast for FY22 unchanged at 9.5%. Yes, I do believe the rates has now bottomed out and we might not see any further slashing in rates. Rate-sensitive sectors might do well in current situations.

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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