Nifty has broken below 15,800. What are the next levels that you are tracking for the index?
We have been oversold for some time now, and around that area, we are continuing to see selling pressure on any bouncebacks. But if you look at the markets globally, we saw a good recovery. So, we are setting off for a big bounce going forward; the broader markets are extremely oversold as 60-70% of the listed entities in India are down more than 30%, and that is a pretty large number. In the US, 50% of the stocks are down more than 50%.
In March-April we fell below 16,000 and everyone waited for it to settle down. We did not get out of the Russia-Ukraine conflict and in between, we went to 18,000-18,200, and then we got hammered after the Fed and RBI hikes. So, the same is the case right now. If you are an investor you would not get the best prices and the best news together. If one has a view of one to two years or even 6 to 12 months, then this is a good time to start accumulating.
Nifty FMCG as well Nifty Auto are the two indices which have gone home with a cut of just 1%. Is there any name that you like from the auto as well as the FMCG pack?
FMCG is a space I would avoid. Although it is defensive, the trend is still pretty weak out there. But auto is something which is interesting. My top pick continues to be Mahindra & Mahindra. The stock has gone nowhere in the last few years; it topped out at Rs 950-1,000 mark back in 2018 and is still below those levels. It used to be at Rs 700-750 back in 2014 to 2019. So it has been an underperformer. Finally, it has started showing a relative outperformance and now once it breaks above Rs 950, the stock could be headed for a big-big move. So, it is an ‘accumulate’ at current levels and the initial short term target price would be Rs 950. Apart from Mahindra & Mahindra, other names like and could be for a reversal.
For the next week which are the stocks you would still want to bet on or watch out for?
I will stick to stocks which are showing some relative strength. One is of course Mahindra & Mahindra; stop loss for it can be at Rs 860 and a target price at Rs 950. Second would be UPL which reversed well from the Rs 770 mark. One should keep a strict stop loss at Rs 760 and a target price of Rs 850.