Golden opportunity for investors to buy companies near 16900-16500: Shrikant Chouhan of Kotak Securities

There is a golden opportunity for investors to invest in good companies around big support like 16900 and 16500, Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts: 

Q) Markets closed the week with a freaky Friday. What led to the price action in the week gone by?

A) It was due to key events such as upcoming state elections, expectation of a rise in the interest rates and concerns over the new Covid variant that may prompt fresh mobility restrictions and hinder economic recovery.

The United Nations (UN) agency is set to hold a special meeting to discuss the implications for vaccines and treatments given the degree of mutation from the original strain.

Q) What does the data for the November expiry tell you about the December series? Where do you see Nifty and NiftyBank headed in the new series?

A) As per the November series data, we feel traders have reduced the long position substantially and have added some short positions.

The huge amount of put writing at 17000 strike price is at risk. In case the market fails to hold 16900 then it would invite further weakness in the short term. 

On the higher side, call writing is seen between the range of 17200 and at 17500. A close below the 16900 level on a daily basis would send the market towards 16500 levels. 

For the Nifty, 17200 and 17500 would be major hurdles on the upside and support is seen at 16900 and 16500. 

For the Bank Nifty, the major support is seen between 35000 and 34500. It has spent considerable time between these levels during the period of June 2021 to August 2021. 

In brief, both the indices are in a trending mode and are heading lower to hit long term supports.       

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Q) Sectorally, auto, PSU banks stocks took the beating. They were one of the top sectoral losers in the week gone by. What led to the price action?

A) Internationally, the rising worries of Covid19 cases and the possibility of further lockdowns are certainly not positive for the sector like Auto, which has a global as well as domestic presence. 

A consistent rise in bond yield is negative for the Banks and that is the reason we are observing consistent selling in the sector.

Q) Unlock themes such hotels, leisure, travel, cinema felt the heat. Do you think these sectors will remain under pressure in the coming week?

A) Certainly, in the short term, these sectors will remain under the liquidation pressure. However, further clarification on the new variant of Covid-19 will determine the major trend for these sectors.

Q) What should investors follow – buy on a dip or sell on rally strategy?

A) There is a golden opportunity for investors to invest in good companies around big support like 16900 and 16500.

Our domestic institutions are buying heavily in the market and to date they have invested around Rs 18,000 crore in the current month. In fact, since April 2021, they have been the net buyers in the market on a monthly basis.

Q) Your top 3-5 trading ideas for the December series?

A) Here is a list of top trading ideas for the new series -

JustDial: Buy between 700-600| Target Rs 850-1000| Stop Loss: Rs 550| Medium Term

Reliance Industries: Buy between Rs 2430-2370| Target: Rs 2550-2800| Stop Loss Rs 2300| Medium Term

Tata Motors: Buy between Rs 460-440| Target Rs 530-550| Stop Loss at Rs 400| Medium Term

Voltas: Sell| Target Rs 1050| Stop Loss Rs 1210| Short Term

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.