Pharma and metals could drive next leg of momentum: Deven Choksey
"When the momentum is back, the market is crazy about the midcaps and smallcaps. I would like to stay a little bit more protective at this point of time as far as the portfolio construction is concerned and would probably continue to stay with some of the larger companies," says Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd.
ADVERTISEMENT Will you be surprised if markets make a new high in this leg of rally?
Deven Choksey: Well, the fabric is woven as far as the market direction is concerned. Though the yesterday's rise has been significantly large as I would like to call it as and money market would take some time to pull off and adjust to this particular rise. But going forward the direction remains clear. We probably would see the higher contribution into the index stocks, particularly from index stocks into the indexes and that would include some of the heavy weights in IT space per se where I believe that could probably start giving the little higher amount of push as against the earlier push of only BFSI and Reliance last few weeks.
So, if the IT stock starts supporting the index, then possibility of 25,200 on Nifty in the following times is distinctly there and should be cross about 25,200 and stay in that particular region between 24,200 to 25,200 on Nifty, maybe one would see that the market consolidating and by the second half would take initiative to go a little further up, but at this point of time direction remains positive.
Maybe some amount of correction in the indices is definitely due because the sharp rise has happened yesterday and that correction could possibly a good opportunity for investors to buy into the market.
What would you recommend buying a fresh right now given how the earnings have panned out and let us keep all the geopolitics, all that is happening on the world aside but just purely in terms of earnings visibility and the valuation that the stocks are available at what is looking good to go.
Deven Choksey: So, when the momentum is back, the market is crazy about the midcaps and smallcaps. I would like to stay a little bit more protective at this point of time as far as the portfolio construction is concerned and would probably continue to stay with some of the larger companies.
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Maybe couple of sectors where the immediate rise including the momentum may support, one of them would be IT, second could be pharma, and third could be metals. They could possibly give the momentum based push as well into the Nifty 50 stocks, but over and above that we continue to hold our positions in some of the good quality BFSI companies where we believe that higher amount of growth is going to drive the profit performance of these companies systematically.
Within the manufacturing space, we remain distinctly clear on two-three aspects, on one side the input cost is remaining under control unlike last year and on the other side the demand scenario, the business are improving, particular for capital good segment as a whole.
ADVERTISEMENT So, we remain distinctly positive on that front as well. Yes, but we should be selective, very-very selective in the midcap space where we like some of the companies, but if the valuations are expensive, probably we would decide before buying into them, that is the approach that we have taken in our portfolio investments.
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So, which is one stock you want to buy, but you would buy 10% lower and which is one stock you are buying right now because you think that another 10-15% is coming in next six months.
Deven Choksey: Yes, it is a good point. I do not know immediately the answer to that one stock. But certainly as I was making a point that some of the IT and pharma companies remain relatively more appealing today because of the trade deal which has been signed with China as well, so more certainty has come on that front.
Not too sure whether I would buy a 10% more into some of the IT, pharma. They are currently available at corrective price, so to an extent I would consider buying into the portfolio now and not going for later.
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