Stock pickers will have fun through the next few months, believes Shrikant Chouhan of Kotak Securities.
“Whenever the market is under the influence of news flows from global markets, we see action or momentum shifting to mid-cap and small-cap stocks from large-cap companies,” says Chouhan, based on his 24 years of experience in equity and derivatives research.
The executive vice-president of Kotak Securities, who also heads the team of fundamental and technical analysis research, told Moneycontrol that they are positive on Reliance Industries where the strategy should be to buy on dips.
Excerpts from the interview:
What are the charts of Reliance Industries telling you ahead of its Annual General Meeting?
For several weeks, volatility has been largely controlled. Actually, since May 2022, the stock is trading within a trading range of Rs 2,365 and Rs 2,820. In July, the stock fell to Rs 2,365, however, it rebounded from there, which is an indication that the stock has started the northward journey towards Rs 2,820.
Broadly speaking, we are positive about the stock and the strategy should be to buy dips. If we go by the seasonal chart, as Reliance Industries has announced commercials for its telecom business, September and October turn on the bullish side.
Do you see any chance of the market hitting record highs in September or by Diwali? What does the rollover data indicate?
Our markets are dependent on the macro factors and how they shape up in the near future, based on that we can design and decide targets on the Nifty or Sensex. Based on valuation parameters at 18,000 on the Nifty, the markets are at the upper boundary of the FY24 valuations. If drops between 17,200 and 17,000 levels, then it would offer decent buying opportunities for investors and positional traders.
We feel the market would trade within the upward part of the P/E (price-to-earnings) band between 18x FY24 = 16,600 and 20xFY24 = 18,000. If these macro factors start favouring Emerging Markets and Indian markets, then we could easily see the markets crossing all-time highs.
The IT sector has been rangebound after a significant correction since the start of this calendar year. Do you see any possibility of major rebound in coming months considering the technical charts?
It will take time for the sector to rebound. We cannot expect a meaningful rebound in the IT sector unless the Fed is signalling a halt to the cycle of rising interest rate cycles or until inflation starts falling. Technically, we are expecting rangebound movement in the lower band of the P/E band.
Do you think it is a stock picker’s market? Will mid-caps and small-caps outperform large-caps? Small-caps are far away from its record high levels compared to mid-caps and Sensex and Nifty.
Yes, we think stock pickers will have fun over the next few months. Whenever the market is under the influence of news flows from global markets, we see action/momentum shifting in mid-cap and small-cap stocks from large-cap companies.
Are the FMCG and Auto sectors looking overvalued now?
They are at a fair valuation, however, the news flow is positive for the sector. Our strategy should be to buy select stocks in the auto and FMCG sectors at a downside from a medium-term perspective. Stocks related to hotels, restaurants and tourism are the new FMCG favourites.
What are the sectors that can outperform here on, as most of sectors already showed smart recovery from June lows?
We feel financial, capital goods, infrastructure, auto and FMCG should outperform.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Disclaimer: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.
