DAILY VOICE | Automobile bank stocks to help Nifty touch 20,000 by FY22-end: Rahul Sharma of Equity99

Market Outlook

Considering the strong rally, Rahul Sharma, Co-founder at Equity99, is advising positional traders to book some profits or else keep a strict stop loss in their positions.

The Nifty can hit 20,000 by FY22-end. We believe that the automobiles and banking sector stocks will help Nifty reach the benchmark number of 20,000, he said in an interview to Moneycontrol’s Sunil Shankar Matkar.

Rahul Sharma has an experience of over 8 years in technical and fundamental research. Being associated with leading banks, working in portfolio management of HNI clients, Sharma has practical experience along with theoretical and technical knowledge, in Indian equity markets. As a co-founder at Equity99, Rahul is responsible for managing a team of research analysts to identify investment opportunities across sectors and companies backed by thorough technical and fundamental analysis.

Edited Excerpts:-

Q: Bulls seem to be in a strong position as the market rallied more than 3.7 percent during the week gone by. What are the key reasons and will the rally sustain in the coming week and in September?

The market rallied 3.7 percent this week after the participation of large caps in the rally. The market continued making new all-time highs every day. However, as markets have given such returns in a very short span of time we expect markets to enter the consolidation phase for some time.

Q: Will the Nifty50 be able to hit the 20,000 mark by the end of 2021 or FY22? What could be drivers?

It’s really difficult to give any timeline considering the moving market has shown in the past few days however we might hit by FY22 end. We believe that the automobiles & banking sector will help Nifty reach the benchmark number of 20,000.

Q: What should investors do now, given more than a 10 percent rally from the month of August? Is it still a buy on the dip market?

For long term investors, there is nothing to worry about as markets are tend to go up in long term. However positional traders are advised to book some profits and if not keep strict stop the loss of their positions. We don’t recommend any fresh buying at current levels. However, investors may add some good stocks on dips.

Q: Broader markets also participated in the rally this week. Do you think Midcap and Smallcap indices will outperform going forward?

Smallcaps & midcaps have shown some movement this week. However, they are still below their highs made at the start of August. The broader market stocks are expected to consolidate a bit after they make new all-time highs.

Q: What are the sectors to look at in the coming week, especially after seeing participation by every sector this week?

This week’s market was driven by all-around performance. However, for next week we expect banking stocks to perform well as we believe that it’s just a start for them. Besides banks, we expect Metals, Paper & IT stocks to perform well next week.

Q: What are five stock ideas that can give more than 20% return in the next six months?

Our top picks will be

Reliance Industries: The stock has been consolidated for some time now and has given breakout on Friday, making a new all-time high. Given the acquisition company made recently and the company entering new businesses, we expect the company to give good returns.

Adani Ports: The company is the market leader and after falling post the Adani Group controversy stock has been consolidating for some time. But now the company has again started upmove. The company has declared superb results and is expected to perform well.

M&M: Considering the current chip shortage & decrease in production estimates, the stock has corrected more than 20 percent since the highs of February. The company has recently launched its XUV700 which has created a buzz in the market. We don’t expect this chip shortage to continue for a longer period and this dip should be considered as an opportunity to add this gem.

ICICI Bank: The company continues making new highs despite underperformance by the banking sector as a whole. The company has improved its operations which can be seen in its results. We expect this counter to show some good move ahead.

Deepak Nitrite: The company is the market leader in nitrites, toluene, brightening agents & phenol-acetoen. Also the company has Rs 1,000 crore capex plans. Recently the company made a new all-time high. We believe the company can show good move in a short time.

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