What do you make of this massive run-up in Nifty50? The interesting part in this rally is, it is not just the largecaps which are flying; midcaps and smallcaps have also joined in. Holistically, the market seems to be in a strong bullish momentum. Do you see this continuing in the weeks to come as well?
In the last two weeks, different kinds of market textures have come into play. Initially, midcaps and smallcaps managed to lead from the front. So, right from the start of the September series, we saw the midcap index, for example, the Nifty Midcap 50 index, rally up from 7,200 or 7,150 levels to almost 8,100 level, if I am not wrong, which it tested on Friday, which is more than 12-13% gain. Looking at the same time frame, Nifty50 has rallied just about 500 points from 17,200 level, which was a base earlier for the index where it languished. So, I believe the bigger part of the rally has happened in the midcaps and smallcaps.
Now, two other important themes were very good highlights for the market in the week gone by. First, the comeback of the underperforming names. It is not just ITC, but a slew of stocks such as Kotak Bank hitting fresh lifetime highs, IndusInd Bank breaking out of the Rs 1,000-odd level and InterGlobe Aviation, which has been an underperformer, making a strong comeback and other names like Bharti Airtel, Voda Idea, Dish TV performing extremely well. Now the other factor to consider was the solid performance of the banking index, where Bank Nifty closed almost at the highest point of the week just nudging towards the 38,000 mark.
Hence, I believe it was a fantastic week for the market in terms of trading. Although, Friday’s session was a bit choppy, but there are no regrets because the last five sessions have been phenomenal for midcap or largecap traders, as there is plenty in the offing for the market in that sense.
Which stocks would you recommend for the next week?
I have been bullish on auto as well as banking names, so I have two picks from these spaces.
The first is a ‘buy’ call for Escorts, because the stock was one of the first largecap auto stocks that managed to break above its 200-day moving average and start a fresh trend over the last two to three weeks. I think it has regained its mojo in the last couple of days. The stock has seen some very good price and volume action pickup.
More importantly, the indicator which I am tracking for Escorts on the daily charts is a bullish Golden Crossover, where the 50-day moving average is crossing above the 200-day moving average. Historically, whenever that has happened for Escorts in the last three to four occasions in the past three to four years, it has led to a very strong uptick for the stock, lasting three to six months at times. So, from current level I would suggest buying Escorts for a positional target of Rs 1,600 with a stop loss at Rs 1,400 level.
Secondly, Kotak Bank, this was one of my recommendations last week as well as the previous week. I think the stock looks very strong as it closed almost at the highest point of the day as well as the week on Friday. So I would suggest buying Kotak Mahindra Bank, expecting that the momentum would continue, with a target of Rs 2,075 and a stop loss at Rs 1,970.
