Dalal Street Voice: Long term investors should buy the dip while traders can take some profit: Parth Nyati of Tradingo
It is difficult to time the market and I believe the bull run may continue for the next 2-3 years therefore long-term investors should remain invested while short-term traders can take some profit from the table after a big rally in many counters, Parth Nyati, Founder, Tradingo said in an interview.
It is difficult to time the market and I believe the bull run may continue for the next 2-3 years therefore long-term investors should remain invested while short-term traders can take some profit from the table after a big rally in many counters, Parth Nyati, Founder, Tradingo said in an interview with Zeebiz’s Kshitij Anand.
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Nyati has over 8 years of in-depth experience in technology and finance.
Over the years, Nyati highlighted that the Nifty50 will have immediate support at its 20-DMA which may coincide with the psychological level of 18000 while 17600-17500 will be the next important support zone.
Edited excerpts:
Q) Nifty surpasses 18600 levels and then witnessed mild correction – where do you see the index by Diwali?
A) The Nifty surprised everyone with its ferocious move in the last few days where it hits a new high of 18,604 on 19 October, but there are some signs of distribution in the market.
Therefore, there is a risk of a correction in the market ahead of the big festival Diwali; however, we are in a structural bull market where any correction will be a buying opportunity.
The Nifty50 will have immediate support at its 20-DMA which may coincide with the psychological level of 18000 while 17600-17500 will be the next important support zone.
Q) Banking stocks also hit fresh record highs in the run-up to Diwali? What is powering rally in the banking space?
A) We are in a roaring bull market where Banknifty was among the few indices that had unfinished business to test its all-time high and now it is catching up momentum.
Moody's has upgraded the Indian banking sector that is leading to bullish momentum furthermore the banking system is in a very healthy stage to support the economy as we have already seen the worst of the NPA cycle.
Q) Metal and energy stocks are also coming up from their underperformance phase. What is leading to the price action and what should investors do?
A) Metal stocks are witnessing a strong rally since March 2020 and they are in a multi-year bull run on the back of massive spending on infrastructure across the globe, strong demand recovery, production cuts in China, and attractive valuations.
Similarly, strong demand, supply shortage, and attractive valuations are leading rally in energy stocks. Since the biggest worry for the global markets is inflation, therefore, commodity stocks may continue to outperform however there are some concerns about growth in the last few days that may lead to intermediate corrections.
Reliance Industries and Tata Power will remain our top pick due to their aggressive move towards clean energy while Hindalco is our preferred bet in metal space.
Q) What should investors do with stocks hitting fresh highs – ride the momentum or book profits?
A) We are in a strong bull run market where many stocks are trading at an all-time high but, investors are advised to not get trapped into stocks where there is a quality concern while the current rally should be taken as a buying opportunity.
It is difficult to time the market and I believe the bull run may continue for the next 2-3 years therefore long-term investors should remain invested while short-term traders can take some profit from the table after a big rally in many counters.
Q) Small & midcaps are now trading at a slight premium to historical averages. How should investors play this theme?
A) Yes, the valuations are stretched which may lead to some serious profit booking in some midcap and smallcap stocks and we are seeing selling my DIIs in the last few days.
Investors should be selective in the broader market because the way will not be so easy going forward while some of the quality stocks may continue to outperform. Investors are advised to stick with the quality with a little longer-term view.
(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)
08:41 AM IST