Auto, banking, consumption, energy, metal and infra sector may rally along with Nifty’s rally in the near-term while Pharma and FMCG stocks may remain under pressure, Gaurav Garg, Head of Research at CapitalVia Global Research Limited- Investment Advisor, said in an interview with Moneycontrol’s Kshitij Anand.
Q) The Nifty50 rose by about 6 percent in the week ended June 5. But, consistent selling pressure below 10,200 capped the upside. How would you sum up last week’s action?
A) The Nifty50 closed above 10,100 levels for the week ended June 5 which is a show of strength in the index. It was evident that the Nifty has been trying to get out of the 4-digit range to start a bullish run which was long due.The last week had been eventful with the Nifty steadily scaling up with cues from both foreign and domestic fronts. However, it must be observed that there is a considerable urge among investors to book profit and this is caging Nifty between 10,000 and 10,200.
The range of 10,160 to 10,200 is grey area and a breakout above 10,200 will be a clear indicator of the possible bullish rally up to 10,500.
Q) What are the important levels to watch in the coming week? Do you think a breakout above 10,200 is possible?
A) The Nifty has ended the week on a positive note with the rally in the banking and metals. On June 5, 2020, the market opened on a positive note but soon the bears had dominated the bulls.
But, in the second half, the index started the rally and closed at three months high. On the weekly chart, the Nifty has formed a bullish candle with a gain of 6 percent for the second consecutive week.
In the last three trading sessions, the market has seen the indecisiveness of the traders by trading in the range and formed Doji candles on the daily charts.
For the coming week, 10,200 may be the crucial level as the Nifty ended above 10,100. If Nifty can sustain above 10,100, we may see the Nifty touching 10,200.
In the coming week, the support and resistance levels for Nifty would be 9,800 and 10,250 respectively.
Q) Any important factors which investors should watch out in the coming week that are likely to chart market direction?
A) The unlock phase will play a vital role in shaping the Nifty in the upcoming months as it is expected to normalise situation barring containment zones and therefore restart economic activity which is perceived as a positive sign and may revive the dwindling businesses.
However, GDP data is not promising, and it is possible that this may create a hindrance. However, with the economy and supply chain getting back on track, any affirmative cue from the government will strengthen the Nifty.
Q) What is your call on the Nifty Bank? What we are seeing is a hot and cold moment for rate-sensitive stocks? What is causing all the volatility in the banking as well as NBFC space?
A) The moratorium period which was earlier permitted for three months has been extended to six months which may hurt the banking and NBFC sector.
Recently, the RBI had made it clear that the moratorium is provided to defer the loan payments and not for the interest.
If in case the interest is waived that it may cost around Rs 2,01,000 crore alone for the banking system which amounts around one percent of GDP.
Banking is the core sector to run the economy for any country and a situation like pandemic may disrupt that.
To stabilize, the government may have to implement various finance-related policies that may have a direct impact on financial institutions. The liquidity crunch has added another flavour to the ongoing crises.
In the coming week, Nifty bank may extend its rally as the government has given green signal to economic activities (with restrictions). We may see BankNifty touching 22,000 & 22,500 with a support level of 20,500 & 20,000.
Q) There was plenty of action in the small & midcap space – what is driving the optimism in the broader markets?
A) In a short span of time, the Nifty has rallied from 9,000 to 10,000 levels on the back of broader investor participation. For the week, the Nifty50 rose 5.9 percent and the BSE Sensex 5.75 percent.
Broader markets outperformed on June 5 with BSE midcap and smallcap indices surging 1.8 percent and 2.5 percent, respectively.
Firm global cues, ease in lockdown measures, continuous inflows of foreign funds, and encouraging commentary by Prime Minister Narendra Modi about the Indian economy kept the momentum upbeat in the markets.
Banking stocks are expected to remain in action. Traders should continue with the “buy on dips” approach with a focus on stock selection.
Q) Which sectors are looking strong and which are looking weak based on technical?
A) Auto, banking, consumption, energy, metal, and infra sector may rally along with Nifty’s rally in the near term. Pharma and FMCG stocks may remain under pressure.
Metal, infra, consumption, and energy sectors had consolidation level breakouts in their weekly charts indicate buying sentiment and seem quite bullish in the short term.
Q) Three trading ideas for the coming week with a time horizon of 3-4 weeks?
A) Here is a list of top three stocks which could give 10-40% return in the next 3-4 weeks:
It is advisable to buy Ambuija Cement above Rs 196.50 with a stop loss of Rs 183 and a target of Rs 215.
It is advisable to buy Bandhan Bank above Rs 260 with a stop loss of Rs 195 and a target of Rs 350.
It is advisable to buy Havells India above Rs 580 with a stop loss of Rs 510 and a target of Rs 680.
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Published at Mon, 08 Jun 2020 06:24:55 +0000-Auto, banking, infra, energy stocks likely to see buying interest: Gaurav Garg