Unlock 5 is expected to further normalise the business as this was the segment that took the hardest hit during the lockdown, Gaurav Garg, Head of Research at CapitalVia Global Research, said in an interview with Moneycontrol’s Kshitij Anand.
Q) Stellar past week for Indian markets with both Sensex and Nifty rallying by over 3% each for the week ended October 1. What led to the price action on D-Street?
A) The benchmark indices rallied from the lower levels after the correction it took in the previous week. Investors capitalized on the opportunity of buying at lower levels, the listings of the IPOs was another reason of positivity on the street along with this, additional capital infusion in Reliance Industries fuelled the rally due to its weightage in the Index.
Q) Small & Midcaps also rallied by over 3% to each in the week gone by. Is it the liquidity wave that is carrying all boats higher or investors are building something positive amid Unlock 5?
A) Liquidity indeed is a cause of volume in this segment however it seems that investors feel this segment to be relatively undervalued and are expecting good returns with the recovering and rising Nifty.
Unlock 5 is expected to further normalize the business as this was the segment hard hit during the lockdown and following few months.
Q) In terms of sectors, banking sectors led from the front, followed by consumer durables and auto – what led to the price action?
A) BankNifty bounced back from the support levels and speculation of increased easing in monetary policy drove the banking stocks higher as the economy moves towards normalcy.
The upcoming festive season is expected to do well for the segment and investors are pinning hopes on it. Auto sales have been growing from the start of the unlock phase and recovered after the correction market saw in the 3rd week of September.
Q) From September quarter – IT Index rallied by over 30%, followed by pharma and Energy. What led to the price action?
A) During the initial months of the lockdown, the IT sector had really struggled to make a good comeback. But, in the second quarter of FY20-21, the sector had witnessed a rally by moving more than 5000 points.
One of the major reasons would be adapting to the new normalcy like work from home where the majority of the IT /ITES had successful. Apart from these the Q1 FY20-21 result are not as bad as expected which shows the potential of the IT sector.
With the increasing demand for the COVID-19 Vaccine, the demand for pharma is also growing. By end of the Sep, more than 150 companies are competing for the COVID-19 vaccine all over the world. With Indian being one of the major hubs for producing the Vaccine the demand for pharma stocks may be more.
In the month of September, we had witnessed many pharma companies like Dr. Reddy has been tying up with the various vaccine manufacturers companies. This may be one of the reasons for the rally in the pharma sector.
Apart from the global pandemic, global leaders are worried about Climate change. The environment and resources for generating energy are the two sides of the coin.
So India is mainly focusing on Green energy and evaluating the alternate resource. One of the major boost for the Energy companies is from the “Aatmanirbhar Bharat” where government bodies are providing loan
Q) As many as 6 stocks rose more than 100% in the September quarter that includes names like Laurus Labs, Birlasoft, IndiaMart Intermesh, Persistent Systems, Adani Green, and Firstsource Solutions. Do you think the momentum will continue?
A) The momentum is likely to slow for some time at least as we can see that these stocks have bounced from lower levels and Laurus labs have gone for a stock split, these stocks are likely to consolidate for some time before any fresh rally.
Q) Any 3-5 short term trading ideas for the next 3-4 weeks?
A) Here is a list of short term trading ideas for the next 3-4 weeks:
Lupin: Buy| LTP: Rs 1028| Buy above 1035| Target: Rs 1080| Stop Loss: Rs 990| Upside 5%
After consolidating in a narrow range, the stock is ready to witness a breakout from the level of 1030. On the daily chart, the stock has formed a bullish breakout pattern.
A breakout above the level of 1035 might lead to a bullish movement. We recommend buying the stock above Rs 1035 for the target of Rs 1080 and keep a stop loss at Rs 990 on a closing basis.
TVS Motors: Buy| LTP: Rs 480| Buy above Rs 480| Target: Rs 520| Stop Loss: Rs 455| Upside 8%
The stock is sustaining on major moving averages on the daily charts. A more bullish movement can be seen if the stock breaches 480 levels.
Along with this, the stock is also witnessing a moving average crossover which may further strengthen the bullish movement.
Considering the technical evidence discussed above we recommend buying the stock above 480 for the target of Rs520 and keep a stop loss below Rs 455 on a closing basis.
Kajaria Ceramic: Buy| LTP: Rs 549| Buy above Rs 550| Target: Rs 600| Stop Loss: Rs 525| Upside
The stock is sustaining above major moving averages on the daily charts. More bullish movement can be seen if the stock breaches 550 levels on the upside.
Along with this, the stock is forming higher tops and higher bottoms on the hourly chart. Considering the technical evidence discussed above, we recommend buying the stock above Rs 550 for the target of Rs 600 and keep a stop loss at Rs 525 on a closing basis.
Muthoot Finance: Buy| LTP: Rs 1153| Buy above 1175| Target: Rs 1300| Stop Loss: Rs 1120| Upside 12%
The stock is witnessing a reversal from lower levels of 1120. Further, buying momentum would be witnessed if the stock moves above 1075.
A breakout from 1175 would lead to the stock witnessing more upward movement. Considering the technical evidence discussed above, we recommend buying the stock above Rs 1175 for the target of Rs 1300, and keep a stop loss at Rs 1120 on a closing basis.
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