Crossing 10,820 is key to a sustained rally
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By A K Prabhakar
The Nifty is poised to reclaim recent peaks, but the mid- and smallcaps that have been laggards since mid-Jan are likely to swing higher faster, according to technical analysts. However, for the momentum to pick up, the Nifty has to cross the 10,820 level and if it happens, the current rally would continue towards 10,950-11,000 levels, they said.
Where are we?
The Nifty after making 11,171 In January made a lower high of 10,929 in May 2018 and these two levels are important to be crossed for bull markets to resume. Only Nifty with just 12-15 stocks is keeping Index higher, while the overall market is weak with almost 18-20% of listed stocks regularly making 52 weeks low and most of the stocks on an average has seen the erosion of more than 25% from January 2018 highs. Nifty below 10,480 and 10,380 then correction starts towards 9,700 or below levels. Nifty 200-DMA of 10,374 and 50-DMA 10,576 are also important levels to watch.
What is in store?
Election in less than 10 months is making big players nervous and with FIIs withdrawing money from emerging markets and flows to MF scheme is also slowing to 24-month low, as in the last 5 months, returns are turning negative. This is a difficult market to make money in next 8-10 months. But it the best market to build a long-term portfolio as many stocks would come to very good attractive levels. Retail is the story which is having good demand and selective pharma stocks are showing bottoming out process.
What could investors do?
An investor having cash level of 40-50% would be ideal, Buy frontline quality stocks like M&M, Reliance, Zee, Sun TV, TCS, Lupin, Titan, Gail, HCL Tech, Yes Bank and ITC. In mid-cap, we like Mahindra Holidays, Trent, Bata India, Petronet, PVR, Eveready, BEL and Coromandel all for 30 months perspective. Next 6-8 months can be uncertain period due to elections but by 2020 end, Nifty is may target 14,500-15,000 so it’s short-term pain with long-term gains.
The author is Head of research, IDBI Capital Markets & Securities. Views expressed are personal.
The Nifty is poised to reclaim recent peaks, but the mid- and smallcaps that have been laggards since mid-Jan are likely to swing higher faster, according to technical analysts. However, for the momentum to pick up, the Nifty has to cross the 10,820 level and if it happens, the current rally would continue towards 10,950-11,000 levels, they said.
Where are we?
The Nifty after making 11,171 In January made a lower high of 10,929 in May 2018 and these two levels are important to be crossed for bull markets to resume. Only Nifty with just 12-15 stocks is keeping Index higher, while the overall market is weak with almost 18-20% of listed stocks regularly making 52 weeks low and most of the stocks on an average has seen the erosion of more than 25% from January 2018 highs. Nifty below 10,480 and 10,380 then correction starts towards 9,700 or below levels. Nifty 200-DMA of 10,374 and 50-DMA 10,576 are also important levels to watch.
What is in store?
Election in less than 10 months is making big players nervous and with FIIs withdrawing money from emerging markets and flows to MF scheme is also slowing to 24-month low, as in the last 5 months, returns are turning negative. This is a difficult market to make money in next 8-10 months. But it the best market to build a long-term portfolio as many stocks would come to very good attractive levels. Retail is the story which is having good demand and selective pharma stocks are showing bottoming out process.
What could investors do?
An investor having cash level of 40-50% would be ideal, Buy frontline quality stocks like M&M, Reliance, Zee, Sun TV, TCS, Lupin, Titan, Gail, HCL Tech, Yes Bank and ITC. In mid-cap, we like Mahindra Holidays, Trent, Bata India, Petronet, PVR, Eveready, BEL and Coromandel all for 30 months perspective. Next 6-8 months can be uncertain period due to elections but by 2020 end, Nifty is may target 14,500-15,000 so it’s short-term pain with long-term gains.
The author is Head of research, IDBI Capital Markets & Securities. Views expressed are personal.