Goodwill Investor Education Initiative: GoodWill Eagle’s Eyes!
Ignore Nifty and Bank Nifty, invest in broader market- Be Stock/Sector specific:
Top Agri, Power, Fertiliser, Tractor – sectors look good for medium term. I.T, Pharma, Telecom, Metals too look better!
The markets are moving fairly in the positive horizon based on the solution in sight for the dreadful vaccine Covid ’19. But the Indices ‘ movement is by and large small and range-bound. Now and then we get some negative news world over and in domestic circles. and hence the Indices are zig-zag.
Nifty is not going to give you great upside from here but the broader markets will do that. Markets have a trajectory of their own because the moment you try to combine what is happening in the economy and try to map the markets, it is going to be a different ball game altogether. Having said that, we have had a phenomenal run up from the March lows and the markets have not let down the investors. We are up more than 40% and at levels of 10,600 a couple of weeks back, we had an indication that it was the best attempt for the markets to end the pullback rally and start a downtrend but the support levels never broke.
In fact, in the last six weeks, every time the Nifty got close to support levels, it has found buying interest that tells you that the market is looking into the future and trying to discount some positives that we do not have right now. We have to respect the price action.
From a charts perspective, after yesterday’s fall, the kind of comeback that we have today just tells you that the market is finding a lot of buying interest at lower levels and for a change, the financials have taken a back seat and many other pockets in the market whether it is Reliance NSE 0.45 %, whether it is IT, metals, autos — a lot of them are contributing to the market rally. I think there is some more juice left in this particular move.
The Nifty hitting the level of 11000-11050 and around those levels, one has to review whether there is more upside or not. For now, the opportunity is still on the long side and till the Nifty trades at levels beyond 10550, one can remain bullish and our biggest opportunity is on the midcaps and the small caps where there is still a lot more upside to play for especially after the new SEBI nroms for MFs.
The financial sector especially PSBs and NBFCs may be avoided in the short term. In the last one week, Bank Nifty has actually taken a back seat A lot of relative strength studies and the ratio chart of Bank Nifty over the Nifty show that we track is downward sloping. Banks do not appear to make a major comeback anytime in the near term. Since GOI is going to top up PSBs with additional capital due to surging NPAs, there will be some small movement upwards – may be there but that will subside soon.
At best, they will stay in the large range and therefore the opportunity does not lie in the banks. But outside of that, the pharma space has been very bullish for the last few months now. One could possibly see a target of about 10,700 and eventually 12,000 on the pharma index.
A lot of popular pharma stocks are setting up for fresh breakouts which could happen over the next few sessions. Metals have completed a bear market and are now setting up for a very large recovery and some metal stocks have shown relative strength,
Nifty has gone through small corrections but metals have been very steady and now as the markets are coming back, metal stocks are looking good for a 20-25% up move. The top names from the current levels. Reliance and Bharti have been favourites all along and there we do not see signs of topping out.
Apart from this, the IT index is at 16500. The midcap IT is one pocket that we like from a medium term perspective. So, great opportunities are there as well.
What we have noticed is that a lot of laggards have gradually made a comeback. Stocks in Midcap that were well destructed for a couple of years have doubled or trebled in value in the last three months. This would continue because the price destruction in the last three years was so large that the scope for recovery is equally large. As we speak, the midcap index is close to 1540 level.
Once this is surpassed, we could see another 5-7% upside on the midcap index and there are various pockets in the market; the agri scheme looks excellent, the midcap IT, some of the power stocks, some of the midcap capital goods stocks, some of the auto ancillary stocks, sugar names, fertiliser names all of them have excellent setups. This is a good time to ignore the Nifty and the Bank Nifty because that is always playing on our minds. But if you ignore those names and trade this market or inve st into the market, it is going to be far more beneficial. The stock specific theme is going to carry on for the rest of this year and Nifty is not going to give us great upside from here but the broader markets -stock/sector specific will do that.
So investors may take the cue from the above and try with midcap stocks or go in for such MFs under SIP.
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