If you look at the Nifty setup right now, yesterday also we comfortably crossed the 25,100 levels, but post that we saw a correction. Again, today we are around those 25,100 levels. Do you expect the market to continue to consolidate around these levels for some time now?
CA Rudramurthy BV: Yes, I do agree and markets are now consolidating. It is in a quiet range and a tight range of around 24,800 in futures and on the upside you have resistance at around 25,250. So, this is about a 450-point kind of a range or a 2% on index. So, I will wait for this range to break out as a very short-term trader and then take a call or else one has to be very stock specific. However, if you see both fundamental and the technical data, whatever you have, I am expecting markets to break on the downside if we do not cross this 25,250 zone on Nifty future.
So, whatever up move we are seeing today as well as yesterday, this has been still below the levels of Friday highs what market made. So, no doubt we have recovered for last two days, but we are yet to even cross the Friday’s high. And if you even see Bank Nifty for that matter, 51,700 on Bank Nifty future was the high made on Friday. We are yet to cross that 51,700.
No doubt the last two days of bounce what we have is yet to cross the Friday’s high. So, I will be very cautious in market. Reduce your leverage. In fact, reduce from your high beta to low beta. Move from mid and smallcap to largecap and this is the time definitely to wait on the sidelines or be in defensive, be very sector and stock specific, look at pharma, look at FMCG and you have to also look at aviation as a sector where you have IndiGo as the top performer.
And crude coming down will definitely help IndiGo to further go up from current level. So, you have to be very sector and stock specific in this market. Overall, on Nifty and Bank Nifty, it is the consolidation phase and wait for market to cross Friday’s high before you take any aggressive buy calls.
As you were mentioning that one should focus on FMCG and pharma. In fact, for the month of September, if we look at FMCG is the only top sectoral gainer so far. Do you expect the September month and the remaining part of this calendar year 2024 to be in favour of the FMCG sector and index?
CA Rudramurthy BV: Definitely, yes. In fact, look at stocks like Hindustan Unilever, ITC, Tata Consumer. All these are stocks which are breaking out of a 10-year kind of a range. And even though last few months, you have seen a huge upside in these stocks.
Still, it is giving you an opportunity as an investor to have them in your portfolio.
So, I will definitely look at buying only from FMCG and even pharma. And from pharma, if you see stocks like whether it is Biocon, Divi’s Lab, in fact counters like even Sun Pharma, they offer a great opportunity for people to be there and me being a bit cautious on market I will definitely advocate bulls to be in sectors like pharma as well as FMCG and few names which I have already told.
And for me, crude oil will come and settle down closer to that $62 to $65 per barrel. No doubt, it is very positive to a country like India which imports crude net.
But however, we have to understand the concerns are coming because of the demand and not supply. And we have to also understand China is slowing down and that is clearly indicated by crude oil prices coming down.
So, for me, it is very clear, be in aviation as a sector where IndiGo is a good stock to own and avoid metals and high beta stocks.
And China slowing down is never good for metals and I will definitely be cautious on market. Reduce your leverage, be cautious, be in only FMCG, pharma and defensive sector and be very stock specific in this market.
You were mentioning the slowdown in China, that is something that is impacting or could impact Tata Motors as well going forward. The counter is down around 6 odd percent. Do you see more downside?
CA Rudramurthy BV: Tata Motors clearly on chart tells me closer to that 920 to 940 zone you can look at accumulating for your portfolio but definitely not before that.
And if you are a very short-term trader, shorting here Tata Motors may not offer any good risk reward. Stock is already down 5-6%, you should have taken this call when the support broke at around 1060 zones on Tata Motors, not here.
But if you want to buy Tata Motors, wait for that levels of around 920 to 940 range, yes, Tata Motors can come down and settle closer to those levels where investors can look in buying.
What are your top picks for the day?
CA Rudramurthy BV: So, I am giving two buy calls and for me, crude coming down will definitely be a beneficiary for aviation as a sector and IndiGo in specific. So, IndiGo can be bought, look at targets of around 5500 initially on IndiGo, with a stop loss of 4750 on a closing basis.
And for me, IEX is another stock which looks very-very strong. I have been recommending this even at levels closer to 170-180, but even at current market price IEX looks good.
Now, I will trail the stop loss to levels closer to 208 and a buy call on IEX for a target of 240 and then 275.