Deven Choksey, MD, KR Choksey Shares and Securities Pvt. Ltd says the market upmove could be due to short covering led buying and technically, if Nifty closes above or stays at 8050 then levels of 8450 are likely to be seen.
Similarly, Jagdish Malkani, member, NSE thinks it could have been both short covering as well as buying. According to him other positives like Fed continuing with its policy of low interest rates could have also aided the upmove.
Moreover, one also saw strong FII inflows, possibly from mutual funds , adds Malkani. He expects the upmove to continue,
Choksey says there has been buying from long only funds, which could have led to the short covering led rally. However, there is a possibility of some moderate correction in case this buying gets subsided.
For positional traders, Choksey advices against selling in hurry till the market completes its count.
Stock specific Choksey feels some frontline stocks look interesting as long-term investments; stocks like Bajaj Auto , some pharma companies, NBFCs like HDFC and LIC.
One could look for opportunities in midcap stocks as long term investments in stocks like Adani Power and Adani Enterprises, adds Choksey
“This is classic bull market stuff”, says Malkani.
He believes the upmove in the market was mainly led by largecaps.
Below is the transcript of Deven Choksey and Jagdish Malkani’s interview to CNBC-TV18’s Sonia Shenoy, Reema Tendulkar and Ekta Batra
Q: A couple of experts earlier in the last few days have been indicating that if there is a bounce on the upside, traders should actually sell this bounce so now perhaps it has become a sell on rally market. Would you concur with that view or do you think that now we have resumed the uptrend and one should buy into this move?
Choksey: Nifty after crossing 8000 we have seen it show typical aspects in this particular journey. The Nifty spread between the cash and the future has jumped up from 15 points to 40 points which means that there is a short covering led buying which has taken place. Technically, Nifty staying above 8050 and closing above 8050 assumes the level of 8450 as a projected level.
What I would think is that if in 7900 to 8300-8400 journey the Nifty has consolidated then in such situations probably from the lower levels it could probably have the potential to go up to 8450 levels that is a distinct possibility.
Along with that today buying is happening in the market from some of the long only funds, from the Foreign Institutional Investors (FIIs) side. And that could be one of the reasons for this kind of short covering led rally taking place in the Nifty. Now if buying gets subsided or if it gets controlled, probably you might see some moderate correction.
However, as long as it stays above 8050 levels we might see the upside in the market continuing, may be selectively into good quality stocks.
Q: That’s a very positive sign, if we are seeing buying from long only funds. Does that throw this ‘sell on rally’ theory out of the window for now at least?
A: One will have to monitor levels very carefully. Till the time the market completes its count, you should not be in a hurry to sell.
Maybe if you are a positional trader then you will definitely have to give a chance to these particular points to cover up. 8150- 8200 are intermediate levels but technically, if 8450 kind of level is possible then might as well run this rally through and then probably attempt to go for shorting the market.
more to come