Any sector-specific moves that you are seeing? Any sectors that you are liking at this point in time which is looking good because we have seen a lot of sector rotation at play of late.
Dharmesh Shah: Yes, in this current corrective phase, if you look metal as a sector seems to be relatively outperforming. We have hardly seen any correction in metal space. So, yes, again China stimulus package and the way the dollar index seems to be panning out, it looks like it is not a day far where we see a breakdown below 100.
So, yes, overall metal as a space looks positive, where stocks like JSW Steel, SAIL, Tata Steel, Jindal Steel & Power, these are the stocks where we believe one should definitely see a recovery in the coming days and we should see 5% to 10% upside in most of the stocks.
Apart from that, again, banking as a sector we still believe the rally which started from 49,000 to 54,000, what we see currently is nothing but the retracement of this rally.
We believe 51,400 to 51,000 should be the strong support for Bank Nifty and we should see a gradual recovery for Bank Nifty too. So, banking, metals, power space as a whole looks positive from the current levels.
Within banking as well, would you now bet for PSU banks versus the private banks names because though we have the data coming in from BOB as well as HDFC Bank as well, but it is BOB that is one of the top gainers F&O today. So, how are you sensing the move in the banking space and any of your top bets from the space as well?
Dharmesh Shah: Yes. Again, I would like to highlight the bigger picture. If you look at the PSU Bank Nifty chart, it has witnessed a decadal break out.
What we see currently is nothing but the retesting of the previous breakout levels. I think the risk reward I would say is much favourable at the current levels for PSU banks because the sector has done nothing for the last six months.
It has been into the corrective phase. We believe the things are getting better for PSU banks. The risk reward looks more favourable from the current levels.At the current market price, we believe the Union Bank of India, State Bank of India, and even Bank of Baroda these are looking more lucrative from the current levels.
We should see a gradual recovery of 5% to 10% for most of these PSU banks. Apart from that, again, in the private banks, stocks like IndusInd Bank, again, the stock seems to be finding a supportive at 50-day EMA and the way the chart’s technical setup seems to be forming out on the monthly chart, it looks like things look more positive for IndusInd Bank for a target of around 1580-1600 in the coming few months.
So, yes, IndusInd Bank, State Bank, Union Bank, Canara Bank, Bank of Baroda, these are the banks one should definitely look out from the medium term perspective.
What is your take coming in, actually, primarily for the metal sector as a whole because we have seen a lot of global cues actually lending their support to the metal space back home. But what is your take coming in on the metal sector and which side are you preferring, the ferrous or the non-ferrous?
Dharmesh Shah: We believe both should do good because as a sector they have done nothing. But yes, stocks like aluminium if you look individual charts of aluminium in particular, in terms of commodity, it seems on the monthly chart the strong base formation, higher top higher formation on the aluminium chart, so clearly indicating aluminium as a space looks positive, whereas stocks like Nalco, Hindalco are the ones where definitely one should look out for in the medium term perspective.
Nalco, one can definitely look for a target of around 245 to 250 and in terms of Hindalco again clearly relatively outperformance if we look at the longer-term picture for Hindalco, it looks like a target of around 810 to 820 for Hindalco.
So, Hindalco, Nalco are the ones on the aluminium space looks positive. Apart from the steel side, I mean, because particularly steel again the sector where the stocks have done nothing for long time, but stocks like JSW Steel clearly outperforming in terms of relative outperformance.
We believe JSW Steel is one stock where we should see a target of around 1130 to 1140 in the coming days. So, JSW Steel, SAIL, which is again underowned, oversold, I would say, where we can see a short covering happening for Steel Authority of India, one can look for a target of around 145 to 146. So, across I would say metal space as a whole looks lucrative from the current level.
Also share your take on the IT space because what we are seeing is that a good rebound and just in a couple of weeks we will start talking about the earnings as well. But before that, it is like IT as a whole and index level is trading at the day’s highest point and a good recovery. So, firstly, what is your take on the IT space and which one will be your top bets in the same?
Dharmesh Shah: We believe the sector has done nothing for the last two years and after a long corrective phase the sector seems to be relatively outperforming. Yes, currently, we have seen some bit of a profit booking happening in TCS after making a high of around 4550 but yes, as you said, that the result season is coming in from the next week, I think more important is the commentary, how they go forward.
The way the interest rate cycle seems to be peaking out in the US, it looks like overall things look positive for IT space. Coming technically again, we believe TCS, Infosys are space, we should focus more towards largecaps I would say, stocks like TCS, Infosys, Wipro, HCL Tech are the ones one should definitely look out for.
And particularly to Infosys, I would say that yes, definitely the stock has been relatively outperforming and a multi-year breakout seems to be panning out for Infosys. So, yes, Infosys is the one stock where we could see a sharp recovery. I would say a new high is likely for Infosys, look for target from 2100 for Infosys, keeping a stop loss of 1765.
So, Infosys, HCL Tech, TCS, Wipro most of them should look positive. But my advice, one should definitely take a call post results because more important will be the commentary, how the commentary pan out for individual stocks post results. So, one should definitely take a call post results I would say.