Yes, not a good day. We all expected this to happen, actually given the fact that the headlines that you were getting throughout the last two days. What is your take now? How are the markets looking? How should one play in this market?
Rahul Sharma: So, one thing that has happened after the recent down move that we have seen is markets are no more overbought and the way things are shaping up, it seems like Nifty should be headed towards the 25,000 mark.
Now, having said that, war is something, historically we have seen whenever war escalations have happened initial reactions have been negative, knee-jerk reactions have happened, but these dips have been bought into.
Now, the concerning figure for us is the FIIs sell figure in the last two trading sessions, 10,000 crores done on Friday, around 5,000 crores done on Monday. And today also, it seems like it should be a big figure on the cash side.
The FIIs flows were something which was keeping the markets high and it was DIIs which were keeping a quiet note. Probably the 1.5 lakh crore odd figure that these mutual funds hold on their accounts, that is something which is the domestic liquidity that we have seen will be a litmus test. So, buy on dip camp is something that will be tested now. Technically speaking, Nifty has broken a crucial support of 25,665 today. The next one is also broken as we speak, which was around 25,400. Now, these are levels after levels. The next one that comes is around the 25,000 mark. So, the best thing to do at this point in time is hold on to your cash investments, do not be in a hurry to book losses in them. Anything that is related to derivatives, maybe these can be exited because the kind of volatility that is there in the market, India VIX is up 12% can be unnerving and these swings can be all over the place.
So, maybe let the situation stabilise for a couple of sessions and post that one can look to do any trading activity. Until then, IT is one sector that we like particularly. We feel IT can play out very well as a defensive.
Last month, it was banks which did well, IT was an underperformer. But this month, I think IT can spring in a surprise. So, look to accumulate IT stocks in this correction. We feel over the next three- to four-month kind of a period one can expect an upside of 15% in the IT stocks. Index can be anywhere in the vicinity of 10% to 12%. So, IT is one place where money can be deployed as a defensive. Rest everything, I think it is best to wait for the storm to pass out.
But what is your take coming in specifically for metal index, given the fact that this one has been bucking the trend and has been in news, thanks to what China also has been doing when you talk about the stimulus and that is also one sort of a worry coming in for Indian markets as well because you have a lot of funds now talking about giving a refocus or relook at the China market when you talk about parking their funds over there. But what is your take, particularly coming in for the metal index now, where do you see it headed on the charts at least?
Rahul Sharma: Yes, so China if you missed, the Chinese markets are up around 45-50% over the last 15-20 odd sessions, that has been a big move post the booster that has come from the Chinese government.
Now, if China does well, metals historically have done well and metal index in particular is relatively better placed. In fact, that index has stayed positive today barring the last one hour of trade.
But these dips, corrections are to be looked upon for buying. Now, what looks good in metal, so the heavyweight Vedanta is something that we are looking to, we have recommended in the past, as a disclaimer I hold this stock in my portfolio, that stock looks good.
Then, we have Tata Steel, which can be accumulated in the volatility, the likes of Hindalco can also be added. So, metals as a space looks good. It is high beta space for sure. But as given the way China has performed over the last few weeks, we feel metals can buck the trend and continue to go higher.
What about the FMCG sector then because whenever you get into festive season, you see a lot of demand come in for a lot of these plays in the consumption theme. How does this one look to you because right after election, this one actually saw renewed vigour.
Rahul Sharma: Yes, so FMCG, especially in the last leg of this rally, it was no more a defensive space because the returns of the FMCG index were very much in line with some of the other sectoral indices that had done.
So, it was expected that along with the broader market, this sector also sees a pullback. But yes, having said that, domestically, we have had a very strong monsoon, the festive season is around the cornor, in fact, today we have started with the Navratras and overall sentiment-wise I think this space should do well.
Although, if Nifty head towards the 25,000 mark, this is not something that may buck the trend, the way, for example, it has done in the past. So, we feel it is best to wait for the Nifty correction to be over before entering into this space. But if you are an investor, I do not think there is any cause of worry because domestic demand remains robust and technically also this is still a buy on dip kind of an index where we feel these corrections are good opportunities to enter into long positions, especially given a 6- to 12-month kind of timeframe.