Nifty likely to fall to 11,300-11,350 before March F&O expiry: Samco Securities

There is a weakness in Nifty as the momentum has cooled-off for the time being and we expect Nifty to decline 11,300-11,350 before the March F&O expiry next week, Umesh Mehta, Head of Research, Samco Securities, said in an interview with Moneycontrol's Kshitij Anand.

Edited excerpts:

Q: What is fuelling a rally in Nifty Bank and what is your near-term target for the index?

A: There has been a shift in lending from NBFCs to private sector banks as NBFCs are struggling from the ongoing liquidity crises. Meanwhile, private sector banks are rejoicing as they enjoy the incremental market share in lending that has helped to boost the rally in Bank Nifty.

In the near-term, we expect Bank Nifty to retrace 38-50 percent of the recent rally downwards, a target in the range of 28,400-28,779.

As private and public sector banks have already run up a lot, we don’t see any particular stock that has room left for an upwards movement.

Q: Are mid and small-cap stocks still worth looking at?

A: No, broadly mid and smallcap stocks have risen very quickly after experiencing a massive fall from January last year. The thrust was very powerful but now corrections will be equally fast because, during the corrective period demand evaporates quickly that lead to a deeper correction.

At 50 percent retracement of the current rally, mid and smallcaps will offer a good buying opportunity. Placing bets when the indices have already run up won’t provide a margin of safety.

Q: How is Nifty looking on charts ahead of the March F&O expiry?

A: There is a weakness in Nifty as the momentum has cooled-off for the time being and we expect Nifty to correct to 11,300-11,350 before the March F&O expiry next week.

As major indicators are currently in the overbought zone, a pullback is imminent from the current levels. Certain sectoral pockets have also started witnessing profit booking. On the whole, a correction is expected.

Q: How are airline stocks such as IndiGo, SpiceJet, and Jet Airways looking on charts?

A: Aviation stocks have been seeing a lot of volatility recently as due to Jet Airways suffering because of insufficient funds.

Since Jet is struggling to get an infusion from an external source and its existing shareholder Etihad might exit this company entirely, investing in Jet Airways should be avoided until further stability is visible on the cards.

IndiGo, with the majority of market share in this space, has become far too costly as market participants have shifted towards Indigo at Jet's cost. We maintain 'avoid' for IndiGo and a 'neutral' stance for SpiceJet.