Go for Lupin and Sun Pharma with a long-term view: Nooresh Merani
Are we in for some more down days going ahead?
Given the amount of negative news that we have had over the last few weeks, the fact that markets have continued to be in the 14200-14300 range is a positive sign. Also, the broader markets have been much more stronger than the index. This is an indication of the fact that whenever there is a bit of good news or things start getting better, a sharp bounce is likely. So, the choppiness could continue for the next two weeks and then we could be looking at a trending move on the upside in a lot of stocks. Any panic should be bought into and overall the sector rotation should continue. Metals, pharma have been doing pharma well in between. Earlier, it was IT that was doing well. So, we will continue to look for the next sector but overall the view is positive. There has been a lot of volatility in the last three weekends with a gap-down opening every Monday morning. That has created pressure in today’s market. For an extreme short-term trader, it is time to wait and watch and as an investor, it is time to get into the dips. Overall more positive than negative after the week’s action.
Where is the opportunity to buy afresh into pharma next week?
There are a couple of pharma names which we like with a longer term view in terms of technical formation. One is
which has made almost four to five attempts around the 1100-mark. A couple of days back also, it went to Rs 1100 but dipped to Rs 1040-1050 on Friday and ended the day at Rs 1080. We are looking for a move above Rs 1,100 towards a target of Rs 1,400.
The second one is
which has been a laggard all through the last few years. In the near term, Rs 650-655 is a resistance point. Once we cross that, we could be looking at a move towards Rs 750 levels. These are the two names which look interesting with good risk reward and a shorter term view as well as a longer term view. We would go with Lupin and Sun Pharma at this point of time.
Wanted to get in your take on individual sectors you have got IT and FMCG which have extended their losing streak for two weeks on the trot what are your observations here?
In terms of IT, we are getting into a sideways zone for most of the larger names. For Infosys, Rs 1,400 seems a major resistance. For TCS Rs 3,250-3,300 seems a major resistance. We are getting into a range, wherein they will stay in a 5-8% range for quite sometime. The momentum on the downside is not very strong and even the midcaps which look like they would see a 5-7% downtick have not seen any follow up selling. That tells us that we are again getting into a consolidation period for IT. This is how the sector has been moving. It makes a strong move over three-four months and then goes silent for one to two months and that is what is happening right now in most of the IT names. So, this is a consolidation and not a crack
In terms of FMCG, the sector seems to say that we are seeing the first change in terms of what happened with FMCG since the last one year. Whenever the markets were in a corrective move, FMCG stocks really did well. Now in the current correction, we have not seen that leadership coming into FMCG. We did see some bit of a bounce in Hindustan Unilever but it could not sustain. We have even seen a breakout in Dabur and we have again gone back to retest the whole space. FMCG again looks like topping out for the short term and getting into a sideways range. Now is the time where to watch out for the rest of the oversold sectors like banks and financials. Whenever there is a bit of good news, we could see the shift happening from IT FMCG towards banking and financial names. This sector has been down and out for the last month or so. As of now, the view is to avoid IT and FMCG. There are better places to get into.
For the week ahead, are there any stocks that you would recommend for trade for Monday morning?
There will be two stocks which we would be looking out for. One is in Pharma that would be Lupin wherein just waiting for a breakout above Rs 1,100. We have kept a stop loss at Rs 1040 and look towards a target price of Rs 1200-1300.
The second one would be a buy on
at Rs 95-96 with a stop loss at Rs 94 with an upside to Rs 105 and even higher. These are the two sectoral shifts which could be seen. We could see pharma make a shift again in terms of momentum and then it could be power which has seen a good correction over the last two months and is showing signs of basing out.
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