Metal stocks witnessed a decent correction on the back of rising fear of new variant, hawkish US Fed and there is still little scope of 5% more correction for Nifty metal index before it bounces back because its 200-DMA comes 5% lower from the current level, Parth Nyati, Founder, Tradingo – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts:  

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Q) What is your call on markets? Does it look like D-Street is not concerned too much about US Fed tapering, Omicron variant, or rising inflation?

A) The US Fed tapering, Omicron variant, and rising inflation are causing a short-term correction and volatility in the market but most of the things are priced-in and the market may reverse on the upside once again sooner or later if there is no major negative surprise on covid front.

We have seen the first meaningful correction of almost 10% in the current bull market and the correction could be more of around 15-20% but this correction is a great buying opportunity to ride the ongoing bull market.

Q) Where do you see the index headed in the next week?

A) Technically, the Nifty is facing resistance near the 17500 level while 17615 is a critical hurdle; above 17615, we can expect a short-covering rally towards the 18000 level.

On the downside, 100-DMA of 17168 is immediate support; below this, Nifty is likely to retest its previous swing low of 16782 while 16700-16400 is a critical demand zone for the Nifty for a strong pullback.

Q) In terms of sectors Metals and Realty fell the most --- what led to the price action and what should investors do?

A) Metal stocks witnessed a decent correction on the back of rising fear of new variant, hawkish US Fed and there is still little scope of 5% more correction for Nifty metal index before it bounces back because its 200-DMA comes 5% lower from the current level.

The Nifty Realty index is in a strong bullish momentum where a recent correction can be called just a consolidation before fresh leg of the rally.

Investors should accumulate quality stocks related to the housing theme because there is much more upside left while metal stocks can be bought for a bounce-back if you get them 3-5% lower from current levels.

Q) We are in the last month of December. What were your key learnings?

A) We are in a bull run and this bull run is likely to continue for the next 2-3 years. One of the most important learning this year is that we stick to some 10-15 quality stocks without worrying about near-term volatility and are allured by their handsome gains.

Many investors hurry to book profit if their stocks become double but gains can be multiplied many times in the next few years if you are holding quality names. Therefore, less activity is more profitable in this bull market.  

Q) What is your call on the rupee?
 
A) The rupee may depreciate to some extent in the coming days amid rising US bond yields, the Dollar index, and concern of inflation.

Technically, 75.65 may act as some support for the rupee (or resistance for the USDINR pair). Above this, the rupee may see further weakness towards 76.5/77.5 marks. On the downside, 75 levels may act as a floor for time being.

Q) Your top 3-5 trading ideas for the next 3-4 weeks?

A) I have a very bullish view on constructions companies for the next couple of months where KNR construction, PNC Infra, and Action Construction are our top picks.  

Capital goods stocks may also outperform where Carborundum universal and Siemens are looking strong whereas the technical structure of three private life insurance companies HDFC Life, ICICI Pru Life, and SBI Life is looking bullish.  

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.