Rather than expecting Nifty50 to hit record highs in September, the other option of ‘by Diwali’ seems to be realistic, says Sameet Chavan of Angel One in an interview to Moneycontrol.
“We saw good performance from quality mid and small caps in the last couple of months,” adds Chief Analyst-Technical and Derivatives at Angel One. Technically, “the price structure is quite sturdy of these indices and hence, we expect some solid rallies to unfold going ahead.”
Chavan, with more than 15 years of experience in the stock market, says the only space to stay away from would be metal. “Although, price-wise it looks very tempting, one should avoid till the time global uncertainty with respect to commodities completely fades away.”
Do you see any possibility of Nifty50 hitting record highs in September or by Diwali? Or is it going to be a rangebound market?
At present, the market is undergoing some time-correction phase of the entire rally we witnessed from recent bottom of 15,200. In such kind of consolidation, it’s generally hard to predict when it will come out of it.
Hence, rather than expecting Nifty50 to hit record highs in September, the other option of ‘by Diwali’ seems to be realistic. It’s a matter of time — we would see the benchmark index coming out of this congestion zone to first challenge the previous high and then eventually registering the new one.
Midcap and smallcap indices/stocks have consistently been outperforming largecaps. Do you think this kind of environment will continue for the rest of the year and does it mean mid to smallcaps are undervalued now?
The broader end of the spectrum generally requires a stable environment and all recent developments with respect to geopolitical tensions, inflation, etc have cooled off a bit or more or less is discounted in prices.
Hence, we saw good performance from quality mid and smallcap propositions in the last couple of months. Technically, the price structure is quite sturdy of these indices and hence we expect some solid rallies to unfold going ahead.
Do you think volatility is likely to be around current levels in the short term?
The volatility index India VIX is already in declining mode and is currently at sub-20 levels. We expect it to subside further and settle around the 16 mark, which is a sign of a bull trend.
Till the time we do not see it spiking beyond 24-26 zone, there is no reason to worry.
The IT sector is clearly a laggard this year. Do you see any sharp recovery in the space for the rest of the year and also is it the right time to bet on these stocks?
The entire IT space is currently in the worst phase, which is very rare to see considering its historical performance. Globally, it’s facing a lot of headwinds and hence we did not see any sustainable rally in IT counters in recent recovery.
But technically speaking, we reckon this as the last phase of the declining trend. It’s difficult to time the reversal but price-wise, most quality names have reached lucrative levels. We would certainly advise nibbling into this space at the current juncture.
Do you see Nifty Bank reclaiming its record high levels in coming months or is it just a rangebound trade around current levels?
The banking space is one notch stronger as compared to the benchmark index and hence we will not be surprised to see Bank Nifty reclaiming its record highs anytime soon.
Also, from a broader perspective, the contribution from the financial space is vital and should be considered as a healthy sign for a sustained upside trend in the market.
What are the sectors that look attractive now and what are the sectors to stay away from?
As we just alluded to in the earlier section, although IT is a bit of a laggard, it certainly looks attractive at current levels. Apart from this, one can certainly bet on banking (especially mid-size private and PSU banks), capital goods and FMCG sectors.
The only space to stay away from would be metals. Although, price-wise it looks very tempting, one should avoid till the time global uncertainty with respect to commodities completely fades away.
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