Your call on the market right now, especially Nifty, Bank Nifty and also smallcap, midcap indices just for the flavour I want to understand, do you see a top being made or liquidity still favouring these guys?
Aditya Arora: Look, we are reading a lot of things about overvaluation in certain pockets. So, capital goods definitely looks little overvalued, inventory levels are rising in auto sector. So, there are pockets where euphoria is seen. So, midcap, smallcap seems little overvalued and overbought on the charts, so that is the space one should avoid if one is looking for buying and holding.Somewhere down the line correction could come and it could take prices lower than the buying price, so that is the pocket of euphoria in the medium term.
And second, on Nifty and Bank Nifty, I am pretty constructive because given the global setup and how the data is pretty negative in the global market the jobs, unemployment rate is rising in USA and GDP rate is slowing down, growth is slowing down. All this data is pointing towards a case wherein Fed would be forced to cut the rate which could bring liquidity to the market and take indices to the higher levels.
Largecaps look constructive in this backdrop and dollar index could also correct. If Fed cuts interest rate, then dollar index could correct which is positive for emerging markets like India. Hence, I remain constructive on indices, largecaps, Nifty and Bank Nifty. And I remain little sceptical in smallcaps and midcaps in the medium term.
What is your view coming in on some of these railway names? Today, also again they are buzzing in trade. Any thoughts specifically on RVNL, IRCON, anything that you are looking at?
Aditya Arora: Clearly, this space is also very overvalued. We have seen one-way rally in these pockets and in this sector specifically. Now market has discounted growth prospects for a long time to come, even market is pricing in growth for the coming years. So, valuations are very overstretched and technically also now we are in sky-high territory, overbought territory, so now for RVNL 560 to 600 is the supply zone, I think that is very difficult to cross in the short term and medium term.
So, I believe supply could come in right now at these levels. So, I do not think there is much upside over here and the downside is significant in the medium term. So, I am sceptical on RVNL and IRCON.
Look at the way Anant Raj is shooting up in trade, almost 5.5%, 6%, 550. The stock has done well from lower levels. But how do you look at the charts right now? What levels can we look at out there?
Aditya Arora: In the short term, it is pretty overstretched. On Election Day, the stock made lows of almost 320, now stock is trading at 550. So, we have seen stellar rise in the stock in the short term. So, in the short term, profit booking can be possible. But in the medium term to long term, the stock looks pretty positive.
What about Swan Energy? There was a block deal in the morning and in fact, most of the stocks are actually doing well in the defence space and now people are doing comparison with Mazagon Dock, which actually hit one lakh crore recently, this one is lower in the same line of business of shipyard. But how do the charts tell you?
Aditya Arora: So, I think clearly Mazagon Dock is very overstretched. In last few days itself, we have seen stock going up from 2000 to 5500. This is clear case of euphoria. Even I was reading how Indian defence space and ship building space is overvalued compared to the global peers. So, somewhere sanity will come in and market will start pricing in as per the global standard and global valuation standards. So, technically also and fundamentally also it is very overvalued and I see a scope of almost 50% correction over here.
What are your top picks for today that you are looking at?
Aditya Arora: So, my top picks are in largecap space as I discussed previously also that largecaps look pretty constructive, so Reliance is a buy at 3200. 3100 is the stop loss and 3300 is the target.
Second one is Infosys from the IT space. We have seen Nasdaq do pretty well and Nifty IT is underperforming for a very long time. So, there is a performance divergence building up since a long time which could mean revert.
Hence, the sentiments are pretty positive for the IT space and we have also seen commentary from various brokerage houses that there could be rating upgrade and the growth prospects are better. So, Infosys is a buy at 1657, 1600 is the stop loss and 1720 is the target.