With the run-up to the elections, we believe sectors like banking, metals, and auto including infrastructure, would continue to get attention from investors, Sandeep Bhardwaj, CEO, Retail, IIFL Securities Ltd – said in an interview with Zeebiz’s Kshitij Anand.

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Q) D-Street closed the week with gains of over 2% despite the US Fed volatility which led to a knee jerk reaction? What led to the price action? Is it the FII buying ahead of the Budget that is fueling the rally?

A) There are several factors that led to the rise in the market during the week:

1. Some quality stocks had corrected more than 20-30% from their recent highs and were at attractive valuations. We saw value buying across sectors in quality companies.

2. Many state governments announced that they would not impose lockdowns and impose strategic restrictions only.  Also, the scenario has changed positively for India as although there has been a sharp rise in the new cases, the death ratio is much less. So, inherently the panic is absent, and the public has come to terms with the new normal.

3. FIIs have been net buyers during the week, and this might be in anticipation for an expected increase in government spending to revive the economy and shift gears. The budget is a great opportunity to fuel FII and FPI inflows in the country.

Q) W.H.O said that Omicron variant is not mild and COVID cases already breached 100000 on Friday. Do you see it as a cause of concern in the coming week if cases continue to pile up?

A) I believe there is no need to panic as of now even as the new variant may not be mild and Covid cases increasing. Going by the early trends, more than half the occupancy of beds was lying vacant in hospitals as symptoms are very mild.

This can be interpreted through an absence of a spike in daily deaths. Also, you see the psychological shift in people’s mind.

They have become much stronger mentally and have accepted covid as a new normal. Hence, I still believe there is no need to panic, yet, although one needs to follow all the COVID protocols.

Q) In terms of sectors – banks led the charge on D-Street followed by energy and auto stocks while pharma and IT stocks saw some profit booking. What led to the price action?

A) The banks had been an underperformer for some time and some quality private banks like ICICI Bank Axis Bank and HDFC Bank were available at an attractive price.

 While select auto stocks like Tata Motors, Eicher Motors, and M&M saw good sales in the month of December, the IT index saw some profit booking.

I believe in the coming week there would be some movement considering the big three of the IT sector – TCS Infosys and Wipro are expected to release their Q3 results on Wednesday.

Q) Broader market also closed with gains of 1-2% for the week ended 7th January. Is it the high beta stocks related to economy space getting attention ahead of the Budget?

A) It’s not just high beta stocks which are leading the movement. We saw bullish momentum across sectors and in all kinds of stocks.

Yes, stocks related to the economy space saw more attention with sectors like banking, metals, and auto outperforming the broader market.

With the run-up to the elections, we believe sectors like banking, metals, and auto including Infrastructure, would continue to get attention from investors.

Q) Where do you see markets headed in the coming week? Which are the important levels to track in Nifty and NiftyBank?

A) Both, Nifty and Nifty Bank, have broken through the downward sloping channel and have breached the previous swing high with good momentum.

Hence, for the short term, the downside pressure might be restricted. Important support levels for Nifty are 17500 and 17250 while resistance is likely at 18000 which has the maximum OI for the coming week.

A breach of 18000 will lead to short covering up to 18200 levels. The important support levels for Nifty bank are: 37200 and 36750 while resistance is likely at 38300 and 38800.

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

A)     Hindalco: Technically, the stock has given rounding bottom pattern breakout on the daily chart. Investors can buy with a target of 525 and 540. A stop-loss can be placed below 460 levels.

B)     Axis Bank has given a double bottom breakout on the daily chart. Investors can buy in the range of 723 to 730 for a target of 760 and 780. A stop-loss can be placed below 689.

C.    TCS: The stock has given a Flag pattern breakout on the hourly charts. Investors can buy in the range of 3835-3855 for a target of 3990. A stop-loss can be placed below 3725

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)