What's In Store For Markets In Next Three Months?
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00:00Let me welcome him in to try and understand what does he think about the broader markets at large.
00:05Manav, great having you. Thanks for joining in. Hope all is well.
00:09Yes.
00:11I wonder, Manav, how do you think about the markets? Because the overwhelming consensus
00:15view is that the markets are overheated, overvalued, and they should correct,
00:20just that they are not correcting.
00:23See, the market structure has been quite bullish. I think it has been, you know,
00:28different dynamics of the markets, which have, you know, throttled the markets higher.
00:34To make it very simple, you know, there has been different sector participations,
00:38which has led the markets move higher. And that is a classical case for any bull market,
00:43let it be the Indian equities or also the global equities. The kind of the rallies that
00:49witnessed in last few odd months, definitely we are in a bull market. But yes, within the
00:55bull market phase, there comes a phase of short-term consolidation or a bit of a pull-off.
00:59But at the moment, we don't see any selling exhaustion or any intermediate talk at these
01:06market levels, let it be the Indian markets or the global markets. But when we talk about the
01:11Indian markets in general, yes, the construct of the market in, you know, post-election has
01:16changed a bit, which we had spoken about last time, where, you know, the focus has got aligned
01:22from the high beta or the classical, you know, cyclical stocks or the PSUs and has shifted all
01:27together towards IT, you know, certain sectors like consumer durables and pharma. So the market
01:33construct has changed. And that's the, you know, the classical way of any bull market that rages
01:39and moves higher. So, you know, at this construct, we are very bullish on the market. I think the
01:44markets are witnessing some sectorial and stock-specific corrections. But, you know, in this
01:49whole scenario, as long as the market remains above 24,000 levels, I think we might see some
01:54bit of a pull-off around these levels, but no worry signal. But eventually,
01:58a likely chance we will continue to move higher in the coming few months.
02:02Okay, so 24,000. So you don't rule out a 2-3 percent
02:08gash, but you believe the eventual move is higher?
02:11Absolutely. I think any short-term, you know, correction of 2 or 3 percent can eventually happen
02:17to any course of the markets. But looking at the construct, I think we are quite constructive in
02:23the medium-term to longer time frame of charts. What are the medium-term targets if you have them?
02:29It could not be an exact target. It need not be an exact target, Manav.
02:33We do expect the next leg of rally, which could take the markets towards sub 26,500 levels.
02:39And that meaningful participation will be witnessed from sectors like IT, FMCG, pharma,
02:45and some support coming from the auto. There is a likely chance that the financials,
02:49defensive of the financials like insurance, which have already started to participate,
02:54you know, this will tag along. So, you know, the general market construct is quite bullish and
02:59we are not seeing any large-cap stocks, which are showing some classical topping,
03:03but just a bit of a pull-off and then we start to move on the upside.
03:06And what is the time frame, Manav, that you're thinking of this? I mean, whether the number is
03:1026 or 26,500 is a separate case in point, but what are the time frames that you believe these
03:14targets could be reached? A very likely scenario,
03:17this should happen by next two or three months, maybe post the October or November. You know,
03:24September is usually a technical, I mean, the month where the market usually takes some bit
03:28of a pull-off. And, you know, looking at the global market charts, it looks to be a breather
03:33kind of a scenario. And I think a lot of data events once gets gathered off, you know, we will
03:39start to bottom out and start to move on the upside.
03:43Got it. Okay. So constructive on markets, it doesn't rule out a 2, 3, 4 percent correction,
03:49by the way, viewers, at 25,000 to a target, I mean, for a market to stay above 24,000
03:56at the very least, it could still correct 2, 3 percent, but that could happen in any market,
03:59no matter how bullish it is. You've given us some sense of the sectors. I'd like to update,
04:04Manav, before I get to your latest report as well. And the update that I want is on IT.
04:09Now, you identified this way early. The sector has done well, relatively and in absolute terms.
04:14But I heard you say that this rally that you anticipate in the markets to come in
04:19would be led by IT. Did I hear you use that term? Yes, absolutely. I think IT will be the
04:26new sector leader, something that we had already discussed and focused a few months back. You know,
04:31the sector leadership will be changed and IT would be taking the stronghold going forward. I think
04:38we have seen a very good classical breakout in the IT index and this sector has been massively
04:44under-owned by a lot of mutual fund investors, by the mutual fund a couple of months back. And,
04:51you know, that massive under-ownership and a run-up, we are seeing some bit of a chase coming
04:56in. Obviously, we have certain data points to reflect that and, you know, it doesn't end here.
05:02I feel currently IT index is somewhere close to sub-42,000 levels, but eventually we will see
05:09another leg up towards 44,000-45,000 levels. And on stock specific, we remain bullish on
05:15names like Infosys, TechEm, Persistent and Naukri, which has been our top
05:20buy from this sector. And within that space, if IT starts to see some bit of a leg upside,
05:26I think that definitely calls for a limited downside for the Indian markets in general.
05:31Okay. So, Infosys, TechEm, Persistent and I heard you mention Naukri has been your top buy. So,
05:38the first amongst equals is Naukri or Infoedge? Yes.
05:43Okay. Okay. So, the top favourite is Infoedge, but the others like Infosys,
05:46TechEm and Persistent also stand out for Manav Chopra. Manav, did you mention consumption at all,
05:53part one of my question? And part two, is this very interesting note that you have come out with
05:57on Titan now, is Titan effectively under the broader consumption theme or are you looking at
06:05dwellers slightly differently within that bucket? Okay. So, the sector which also has been an
06:15upgrade on the technical perspective has been a consumer durable sector. We have seen a good
06:21amount of rally and outperformance in the last few months and the sectoral change and the market
06:30construct have become slightly bent towards the low beta, which was anticipated. And within this
06:35space, I think Titan is one name which has seen some bit of a correction of 15-20% in last six
06:43odd months. This has been one of the underperformers and we are sticking to one of the
06:48process on our technical models to identify early trend movers. There is a long-term proprietary
06:56scanner that we have created, which helps us identify early trend movers at an early stage,
07:01which was one of the qualifying criteria for our IT index and a similar one is for a stock specific
07:07on Titan. Whenever on Titan there has been a buy signal in last four years, every year we have
07:14witnessed one buy signal as per our model and let me tell you Neeraj, all the buy signals have given
07:20positive returns in three to six months, giving an average gain of 20-30%. And with that, with a
07:30strong tailwind of the consumer durable sector, I think Titan has witnessed some bit of an accumulation
07:35and selling exhaustion completion in last couple of weeks, which definitely triggered some strong
07:42buy setup for us and which got validated by some early breakout signals and based on that we expect
07:49new highs coming in for the Titan. Yesterday there was an initial breakout which witnessed
07:54a strong trading day and as per the open interest data, there was short covering. So
08:00that really talks about the under-ownership of Titan even at the current levels and this
08:04is one stock within the Nifty 50 which has a reasonable room to go towards new highs. So we
08:10have a medium-term upside target of close to 4350-4700 and as per our models, we expect
08:16if in the past five years, once we have a buy signal, there is an average
08:23return of 50% in 12 months time. So that gives us an upside long-term target of 5400. So a reasonable
08:28upside room even from the current levels, currently priced at 3650. It remains a balance dip for us and
08:35I don't see the stock go below 3450 on the immediate basis. In which case, just wondering
08:41because it's a technical call, are there stop losses that you're putting in place for a large
08:45position on Titan? Yes, so we have recommended a stop loss of 3400 on closing which is a 6%
08:50stop loss for an upside of 30%, a very high risk reward trade for us. Oh yeah, most certainly, very
08:55high risk reward as well. Okay, so IT markets, IT consumer durables, all three favourable within
09:02IT. You've given us your list and within the consumer space, Titan. One last 30-second
09:06answer, Manav, if you can. Is Titan the lone ranger or some of the other jewellery stocks could also
09:10do well? Any study there? Yes, so this segment has been quite bullish. We have witnessed a
09:16good amount of momentum, particularly in names like Kalyan Jewellers. Now the stock continues to be one
09:21of very strong favourites for the mid-cap segment. The momentum remains to be very, very
09:28strong and upbeat and absolutely no thought about the fact that the stock will continue to move
09:36higher and the trajectory for Kalyan Jewellers remains very, very strong. I think it will
09:42continue to outperform, no second thought on that. But based on the current market setup, I think we
09:46have to also identify certain structures which are providing you high risk entry, maybe post
09:51a correction. That's why Titan also got qualified but largely I think Kalyan Jewellers too has
09:57some more legs on the upside and looks very bullish within the segment itself.