Bulls giving control of D-Street; 11,400 is likely to act as a strong support

Markets are under extreme pressure and bulls are in fact slowly giving up control as the current budget didn’t give enough short-term boosters. The Street was disappointed which led to the massive fall in the Nifty50, and we see 11,400 acting as a strong support level for Nifty in the near-term, Umesh Mehta, Head of Research, SAMCO Securities, said in an interview with Moneycontrol’s Kshitij Anand.

Q) Bulls remained in control of D-Street in the week gone by. We saw plenty of support near 100-EMA and some bit of resistance at 11,600 on the higher side. What are the levels you are mapping for the index in the coming week?

A) Markets are under extreme pressure. Bulls are, in fact, slowly giving up control. As the current budget didn’t give enough short-term boosters, the Street was disappointed which led to the massive fall in the Nifty50. We see 11,400 acting as a strong support level for Nifty in the near-term.

Q) Important trigger points to watch out for in the coming week? Will investors react to Infosys numbers, as well as WPI data? What is your view on both TCS and Infosys?

A) As the unfolding of the earnings season has begun, key results next week will keep certain stocks under focus. TCS has kept its run rate intact with a 10.8 percent YoY growth in its bottom line.

As a leader, it has set a decent tone for the entire IT sector. Infosys, too, should deliver a result which is in line with market expectations albeit with lower margins.

Q) SEBI, at its board meeting held on June 27, mandated that promoters would be required to disclose detailed reasons for encumbrance separately where the pledging of promoters (and PACs) was more than 20 percent of the total share capital of the company or 50 percent of the total promoter holding. As on June 30, there were 265 such companies listed on the NSE. What should investors do?

A) This announcement of disclosing detailed reasons for encumbrance separately in such cases is extremely beneficial for investors as there will be more transparenc y and clarity in the system.

Henceforth, investors should keenly check for such encumbrance details in order to take particular actions on these 265 stocks.

Q) About 300 companies in BSE 500 are trading below their 200-DMA which include names like MRF, Page Industries, Eicher Motors, Maruti Suzuki, Bajaj Auto, Hero MotoCorp, Tech Mahindra, Cipla, Tata Steel, Sun Pharma, etc. among others. Some of the names are top marquee names in Nifty50 --- are they attractive buys at current levels? Or should investors wait for the trend to reverse before pushing the buy button?

A) Investors must not take pre-emptive actions and should wait for the right time to invest in these marquee companies.

Currently, investors should wait for a reversal since, till now, there are no signs that these stocks have bottomed out. A wait-and-watch approach should be the mantra for now.

Q) The trend remains strong for 200 stocks which include names like Shree Cements, Nestle India, Bajaj Finserv, UltraTech Cements, Bajaj Finance, DRL, HUL, Divi’s, L&T, RIL, Bata India, etc. among others. Are they attractive buy ideas as the momentum remains strong in these stocks?

A) No, it is not the best time to get into these stocks as there is a lot of pressure currently from the macros. Investors should wait for some more time and get into these stocks only once there are signs of revival.