Tips for Trade: Stick to pharma, auto, FMCG and bank stocks
On our show, Tips for Tomorrow, market expert Nipun Mehta and Rajesh Jain, EVP-Retail Research, Religare Securities discuss the performance of the day.
It was a range bound session for India’s benchmark indices on Thursday. The BSE Sensex index closed off the day's low, falling 63 points or 0.37 per cent to close at 17,058. More importantly, the Nifty closed above the 200 daily moving average. It declined 15.90 points to close at 5,178. The market ended the expiry day on a negative note.
Capital Goods and IT stocks witnessed selling pressure. Moreover, foreign investors being jittery over the taxation of participatory notes issues under the General Anti-avoidance Rule or GAAR created additional pressure on markets.
On our show, Tips for Tomorrow, market expert Nipun Mehta and Rajesh Jain, EVP-Retail Research, Religare Securities discuss the performance of the day.
VIEW ON MARKET
Nipun Mehta feels that no significant, positive triggers were seen in markets. "Corporate earnings in March could trigger fresh buying," he said.
Rajesh Jain expects markets to consolidate going ahead. “Support for the Nifty is seen at 5050-5100 levels. The Nifty may pick up momentum if it breaks above 5300 levels,” he added.
GAAR IMPACT
According to Mehta, foreign institutional investors (FIIs) are not comfortable with negative regulatory news flow. “FIIs need more clarification on GAAR. They would wait-and-watch before taking fresh positions,” he added.
Jain advises being cautious on FII action in April. “FII outflows cannot be ruled out ahead,” he said.
STOCK PICKS
Mehta doesn’t see M&A action in the infrastructure space. He advises buying IRB Infra, Unity Infra at current levels.
According to him defensives would continue to see fresh buying if markets continue to slide. “Cement, FMCG sectors are good defensive plays,” he added.
He also suggests accumulating capital goods and bank stocks at current levels.
Jain is overweight on defensive stocks. He likes HUL, DRL, Lupin and Divis Lab. However, he said that he would wait for a while before accumulating stocks. “It is good to start buying if Nifty falls below 5100 levels. Banks and auto stocks look attractive,” he added.
As far as M&A in infrastructure sector is concerned, Jain feels that there is a limited scope for M&A in that sector. “Long term valuations remain attractive but leverage remains a big concern for the sector,” he cautioned.
Q4 EARNINGS
Jain sees marginal improvement in IT earnings. He feels that large cap cement companies could see strong earnings in the fourth quarter.