Stay Put! Nifty50 likely to head towards 18,700 in December series: Mohit Nigam

In an interview with ETMarkets, Nigam said, “The weakness in stock prices comes amid a slump in underlying metal prices due to growing concerns over inflation globally and uncertain demand outlook from China and also US Fed is increasing interest rates very aggressively which has triggered the fear of recession,” Edited excerpts:

What a week for Indian markets! Sensex hit a fresh record high on Thursday. What led to the price action on D-Street?

In the last week, Sensex hit a record high of 62,413 and closed at 62,272 level which was an all-time high on a closing basis. This rally of Sensex is led by various factors:

1. In the latest minutes of the Federal Reserve, policymakers have been expecting a slower pace of interest rate hike
s which gives the market confidence that inflation has peaked.

2. Continuously falling crude oil prices on the news of capping on Russian oil, is positive sentiment for the market.

3. Top out of USD INR also boosts the confidence of investors.

Where do you see markets headed in the coming week? Any key levelthat one should watch out for in the coming week, and for the December series?

Indian market has rallied in the current week and made a high of 18,530 levels and closed at 18,484 levels which was anall-time high on a closing basis.

For the upcoming week, we can continue to witness this rally, led by positive outlook from global markets, falling crude oil prices etc.

For the Nifty, we can see upside up to 18,700 levels, at the same time investors should follow stop loss as selling can be witnessed at higher levels.

In terms of sectors, Nifty PSU bank rose more than 6%. What is driving the rally in the PSU space?

PSU bank index witnessed a sharp run-up in the last month, witnessing a 17% rally in November. Balance sheet clean up, strong provisioning, coupled with robust advance growth numbers in Q2FY23 gave steam to the rally.

The asset quality for PSU banks has shown an improvement from a peak of 14.6% in March 2018 to less than 8% for the sector on the whole.

Most PSU banks had lost market share and were quoting at lower book values due to underperformance for the past few years. But these banks are now garnering high advances with rising system credit growth.

Going forward, deposit growth will be an important parameter to monitor for the sector. The key thing to watch out for is to see if the valuation gap between private and PSU banks is ready to shrink.

Top gainers of the week include and which was up 30%. What should investors do?

Online travel agency company Easy Trip Planners announced issuing bonus shares in the ratio of 3:1 and a stock split in the ratio of 1:2. The shares of the company rose ~40% in the current week.

We believe at the current levels, investors who have entered at lower levels or have the scrip since the IPO should safeguard their invested capital and stay invested with their profit amount.

The shares of UCO Bank have hit a new 52-week high of Rs 22.45 giving returns of ~70% after their declaration of quarterly results. We advise investors to book partial profits and trail their stop loss according to their risk appetite.

Any particular strategy that traders can deploy for the coming week?

Nifty IT is trading in a positive trend, and we may see a breakout in the Nifty IT around 30,500 levels. A breakout in the Nifty IT above this level may lead to heavy buying in midcap and smallcap stocks of this space which are trading at attractive levels.

We believe that investors should accumulate small and mid-IT stocks for the small to medium term to generate good returns.

What are your trading ideas for the December series?

Here is a list of trading ideas –

:

Recently, the company raised its FY23 revenue guidance to 60%, with EBIT margin guidance to at 12-14%. Gross margin would likely improve in coming quarters.

The company is poised for strong growth led by continuous expansion in different products and geographies.

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The company’s long-term growth drivers remain intact with the rising application and consumption of structural

in residential, commercial, agricultural, and infrastructure spaces.

The company achieved the highest-ever volumes in Q2FY23 and maintained its guidance of achieving 4 mn tonnes volumes by FY25.

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We believe GNFC is a good bet for December expiry as the stock has corrected ~10% after the declaration of its results. With the Gujarat state elections due next month along with the expectation of good news from the fertilizer sector.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)