Bajaj Twins, Titan and Escorts stand out as safe bets in volatile market: Rahul Sharma

“As we are also getting into the budget, we are also getting into the RBI policy, so a lot of events are lined up and the markets want, at least the shorts want to book their profits and stay relaxed ahead of these events,” says is Rahul Sharma, JM Financial Services.

Help us with your take on the benchmark indices itself because 23,000 is where nifty is taking support but given the selling pressure and pressure at that high level do you believe this particular level will be defended Or is Nifty due for further correction from here given the market movement and volatile action?
Rahul Sharma: So, it is clearly a market that was very oversold and we are seeing a bounce back in today’s session. Now a bounce back to 23,500, at a maximum of 23,800, is the scenario so far with reference to monthly expiry or January expiry which is scheduled next week. Now, structurally speaking 22,800, 22,700 could be a possible bottom for Nifty and we may see a panicked bottom before monthly F&O expiry.

So, the best thing is to take it one day at a time. Looking at the way the midcap indices are outperforming today, looking at the way the Nifty is holding the 23,200 mark, it seems that the bounce back is very much on and this bounce back, the current target is placed at 23,500, which is then reviewed. One can see if 23,800 is something that the market will try to verify.

Big heavyweights like Reliance, HDFC Bank, be it Wipro, IT in general has supported the market so far, they haven’t really seen the fresh weakness that we saw when the Nifty touched around 23,000, we broke 23,000 a few days ago. It is something that is comforting.

So, the heavyweights are what have been supporting the market so far and the rest of the results if they come in and are better than expected, it will call for a short covering rally especially from FIIs. As we are also getting into the Budget, we are also getting into the RBI policy making, so there are a lot of events lined up and the markets will want, at least the shorts to book their profits and stay relaxed ahead of these events.

What we are seeing given this volatility is that the IT index is definitely having a good day and even yesterday we saw some of these largecap names bounce back. So, how much confidence does that give you in the kind of up move you’re seeing in the IT space, should one use this opportunity to maybe exit some long trades entered earlier or is it more that you’re looking ahead. The point?
Rahul Sharma: Therefore, some setups are very robust in nature. For example, some midcap IT names such as LTIMindtree have actually reached higher levels compared to the December lows. So, there are variations in some of these names and these are the names that can work well. So, we expect a mixed bag of operations in the IT space. Now, apart from IT what looks good is that we like the NBFC space both the Bajaj twins are trading very strongly, they did not improve throughout the fall and now they have broken away from their short term consolidation. Apart from that Titan is another stock which is showing divergence and as Nifty is trading from current levels we can see the stock heading higher.

So, be selective is the mantra and like some of these counters that didn’t really make new lows when Nifty went down to 20,000, Bajaj Twins, Escorts, Titan are the counters. Which looks good on the largecap space. And apart from IT, the best thing is to be selective and focus on the midcap IT space that can do well from here.

Help us check the exact chart on Go Digits, the stock is over 9%; Pidilite’s volume show is quite impressive; And then you also have the KEI which is up 10% today.
Rahul Sharma: So, Go Digit is like bouncing back from oversold territory, the stock was like forming a base around the 290 area. Given that the stock has multiple resistances around 320-325, it is best to book out or exit if there is a stalled position.

As far as some of the other counters are concerned, we are seeing a bit of a covering rally except for something like KPIT Tech bouncing back, for example.

So, stock specific activity is something that is paramount unless Nifty breaks out like the morning range we are seeing expect stock specific activity to happen.