“Nifty is expected to rise next week as the second quarter earnings season starts from Monday. IT results should be good as IT revenue growth was good in the second quarter and the currency also provided wind favourable,” says
VK Vijayakumar,
Chief Investment Strategist at
,
said. In an interview with ETMarkets, Vijayakumar, said, “Since DII plus retail accounts for 81% of daily spot market transactions through exchanges, they are now the buzzwords. The sale of FII is easily absorbed”. Edited excerpts:


A volatile week for Indian markets where benchmarks faced resistance near key resistance levels, but bulls remained firmly in check. What led to the price action?


The general market trend for some time has been India outperforming its peers. The fundamental driver of this outperformance is India’s outperformance in growth and hopefully corporate earnings.

In the showdown since the June lows between FIIs on one side and DIIs plus retail investors on the other, the latter have won.

Given that DII plus retail accounts for 81% of daily cash market transactions via exchanges, they are now the buzzwords. The sale of FII is easily absorbed.

After a 1% rally in the past week, where do you see Nifty heading in the week ahead?
Nifty is expected to rise next week as the second quarter earnings season starts from Monday. IT results should be good as IT revenue growth was good in the second quarter and the currency also provided a tailwind.

Banking results are expected to be very strong, supported by impressive credit growth and improving asset quality. The market would react to the good results.

Small and mid cap stocks outperformed benchmarks. Is it festive cheer or short blankets?
Mid caps have outperformed this year with a return of 3.17% since the beginning of the year. The recent outperformance is likely due to expectations of strong second-quarter earnings and holiday cheer.

How are FIIs placed during the feast month? Do you think the worst is in the price?
FIIs sold shares to the tune of Rs 7,623 crore in September (NSDL data) mainly due to the appreciation of the dollar.

The reiteration of the Fed’s hawkish stance and the statement that “monetary tightening will continue until the job is done” led to a sustained rise in the dollar and capital outflows from most emerging markets. .

However, the decline in the Dollar Index from over 114 to around 111 has now halted FII selling and they have turned buyers in October to the tune of Rs 2,440 crore (NSDL data). This trend should continue.

From a sector perspective, metals and capital goods stocks led the pack of winners among the indices. What led to the price action?
Metals stocks mostly rebounded into oversold territory. Purchases of capital goods are sustained since the sector is doing well.

There are clear indications of a CAPEX cycle in the economy as capacity utilization in the manufacturing sector has breached the crucial 75% level, which normally triggers CAPEX. For this sector, there is more upside.

3-4 trading ideas for the next month?
Financials, autos, IT and capital goods stocks look good for a festive rally month.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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