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Ajit Mishra, VP Research at Religare Broking feels traders should now opt for a selective approach and advised preferring index majors and other heavyweights.
With vaccination picking up pace and recovery in economic parameters, a catch-up move is expected in the banking sector, while FMCG and the auto sectors are likely to see good traction with rising demand, he told Money control in an interview.
Edited Excerpts:
Overall the market was range bound in the passing week though benchmark indices are near record high levels. What do you expect for the next week?
Markets have started the week on a buoyant note and we expect the prevailing uptrend to continue, citing the potential of a steady up move in the banking index, which has been hovering in a range for the last two months. All the sectors are contributing to the move on a rotational basis but we feel traders should now opt for a selective approach and advise preferring index majors and other heavyweights.
August series was pretty good for the benchmark indices but broader markets saw consolidation and correction. What does the F&O and rollover data indicate about September series?
Both indices, Nifty and BankNifty, witnessed lower rollover in the September series amid mixed cues. However, with stability in the global markets and favourable local cues, we are seeing buying interest emerging on every dip, with noticeable interest in the index majors. And, we feel the same trend would continue in September month with intermediate corrective phases.
IT sector was the rock star (followed by FMCG, Oil & Gas, and Power) during the series but Metal was the worst performer. What are those sectors that would be in action in September series?
With vaccination picking up pace and recovery in economic parameters, we expect banking to witness a catch-up move. Besides, FMCG and Auto are likely to see good traction with rising demand.
As per the derivatives stats, cement, oil & gas, and realty witnessed the high rollovers so participants can selectively choose stocks from these sectors as well.
More than Rs 18,000 crore was raised by companies through IPOs in August but the performance of 6 out of 8 stocks listed in August was weak compared to issue price. Do you expect the trend to continue in the primary market in September?
We feel the main reason for subdued listing was the fear of a faster-than-expected rate hike and stimulus tapering by the US Fed. Besides, the COVID cases globally also impacts the sentiments in the middle.
The recent commentary from the US Fed chairman on policy tightening in Jackson Hole has eased the participants’ nervousness which in turn has again triggered an up move across the globe. Going ahead, we would recommend being selective while subscribing to the IPOs and suggest keeping a long term view instead of making the investment only for the listing gains.
What are key events to watch out for in September and what is your advice to investors/traders for September?
Globally, the high-frequency growth indicators and inflation data especially in the US and Europe would be in focus as that would provide some cues on the future course of action from central banks. Later in the month, the Fed meet (September 21-22) would be actively tracked by investors. On the domestic front, auto sales data, PMI and inflation data would be on the radar. Besides, updates on vaccination and further easing of restrictions would hold great importance.
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