What is your take on the market and what are going to be your picks for investors?
Dharmesh Shah: The market seems to be looking for a bit of a breather. There is anxiety ahead of the US-India trade deal. We believe going forward the market should trade positively because the Nifty seems to be consolidating above the breakout levels which also coincides with the 20-day EMA which is placed at around 25,200. So, 25,200, 25,100 remains to be the very strong support. I agree that the markets are lacklustre; there is more of a stock specific action.
The market is waiting for this event to pan out and more importantly, is looking out for the Q1 numbers. So, stock-specific actions are likely to continue. If you look at the broader picture, we expect the Nifty to head towards 25,800 in the coming month with strong support at 25,200 because if you look at the market breadth, that is a good indicator to understand the sentiment of the market.
If you look at the market breadth, the percentage of stocks trading above 200-day moving average of CNX 500 is currently at 60% compared to 52% last month. It looks like maybe in the near term, we see more of a consolidation, but it is more of a buy-on-dip market with strong support at 25,200 and target of 25,800 to 26,000 in the coming month.
If I take an analogy of a football match, this market is behaving like two goals this side, two goal that side, and ending in a draw. Which are the sectors one should pencil in or one should wait and watch before entering the market?
Dharmesh Shah: The sectors to talk about include banking. It is clearly outperforming even in this current corrective phase of the market. Particularly, PSU banks appear to be on the verge of a breakout. We believe PSU banks are the one sector which we like. We can see an uptick coming in the coming months. Apart from that, real estate as a sector, in the last two months, post RBI rate cut, has seen a sharp recovery. But what is happening now is nothing but a retracement of that rally. So, we believe in the real estate sector, banking. Metals. It looks like a retracement is happening. Metals should be bought on any dip. So, metals, real estate, PSU banks are the ones one should definitely look out from the medium perspective.
What is your stance on stock-specific approaches? The sectors are doing a lot of churning, but at the same time, which are the stocks on the radar?
Dharmesh Shah: Definitely. We remain positive in real estate. Phoenix Mills remains our top pick. On Tuesday, we saw a strong move from Phoenix Mills and the company seems to be expanding its portfolio into the retail segment. The target of 18 million square feet is a good positive going for Phoenix Mills.
But coming to technical, again we believe that the stock seems to be forming the base at about 100 week EMA. Since November 2020, the stock had never breached 100 week EMA on the closing basis and currently the monthly charts for the last nine months show that the stock has been consolidating in this range of 1640 to 1300. So, we expect a breakout happening for Phoenix Mills, on the higher side in the coming days and we expect the stock to head towards 1840 keeping a stop loss of around 1488. So, Phoenix Mills is one which remains to be our top pick inside the real estate space where the risk-reward looks more favourable at the current market price.
Apart from that, coming to logistics, we like JSW Infra. The way things are panning out for most of this logistics, the sector has done nothing for a long time. We expect a gradual outperformance going forward for JSW Infra. Again, a strong base formation, 100-week EMA and joining the lows of strong buying demand emerging at the lower end of the rising channel, it looks like JSW Infra should see a relative outperformance in the days to come and we expect the stock to head towards Rs 336, keeping a stop loss of Rs 296.
