(mamaearth), Raymond,
Dixon Technologies and three more stocks. Here’s what he recommends: Excerpts:Markets, to a certain extent have factored these developments and investors also do not appear to be perturbed. This can be inferred by the sideways movement of India VIX, the fear index, which continues to trade within a reasonable range between 15-20.
However, the benchmark indices do appear to display some fatigue as higher levels are being sold into and profit booking is also visible amongst stocks, as the run-up in many cases, has been too fast and swift. Further, investors are treading cautiously in the current market scenario, given that the risk-reward ratio does not appear to be very favourable.
The rise in yields in both the US & Japan, with the US 10-year treasury yield rising above 4.5% and likewise, Japan’s 30-year yield touching 5.14%, clearly indicate that investors are once again, concerned about global macros, and a rotation of money from riskier assets to safer assets appear to be happening.
Furthermore, to add to the existing turmoil, a downgrade of the recent US sovereign credit outlook by Moody’s to AA1 from AAA, has also not helped matters. However, it would be appropriate to adopt a wait and watch policy over the next fortnight to 30 days, for a clearer picture to emerge.
Overall, the uptrend remains intact for both Nifty & Bank Nifty, however a decline in the bullish momentum can definitely be seen on the charts. We have been advocating a buy on dips strategy, with support for Nifty seen around the 24,300-24,400 zone whereas resistance is seen around the 24,900-25,100 zone. As far as Bank Nifty is concerned, support is seen around the 54,400-54,500 zone whereas resistance is seen around the 55,800-56,000 zone. Amongst the two, Nifty continues to outperform Bank Nifty this month, clearly indicating the overall interest amongst the investor community.USA sovereign credit rating downgrade by Moody’s is definitely a cause of concern for global as well as domestic investors, as that marks a significant shift in the way investors perceive the US debt. Moody’s downgrade appears to be on the back of rising debt and reduced revenues from tax cuts, as the primary reason for this action. Effectively, this is likely to have a negative impact on the US economy, but it would be too early to say the quantum of impact on the IT sector, as the Indian IT sector is very closely tied to the fortunes of the US economy.
Luckily, the US inflation rate continues to remain in the comfortable zone, and other key macros such as GDP growth rate, monthly jobs data, are mixed at the present. Investors in the IT sector should ideally look at booking part profit and can hold the rest from a long-term perspective.
Midcaps and smallcaps have had their best days as well as the worst days, and the price movements in either direction, are nothing short of a pendulum move, in many cases. So naturally, it becomes difficult for investors to decide at what levels to enter and to hold till what time.
So, the best strategy in these two segments, will be to have a 3-5 year investment horizon, stick to the quality names in key sectors such as financials, pharma, auto, tourism, defence and infra, to name a few, and add onto on declines as well, to benefit from the power of compounding, over the longer term.
TTML was up 26% WoW, Honasa too was up by 26% WoW, whereas RPower was up by 15% WoW. Investors would be well-advised to book part profit in all these three counters, as the moves have been very sharp, and they can trail the balance, below the technical levels of 65, 290 & 45 respectively.
On the losing side, ABRFL lost 11% WoW, 83, DOMS too lost 11% WoW while Dixon lost 10% WoW. Investors can look at exit strategies in these stocks as they appear to have formed a short-term top. So, bounce backs could be used as an exit opportunity. As far as Raymond is concerned, investors can look at this stock from a long-term perspective.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
