April 20, 2021

Need to go lengthy on auto? Listed here are Kunal Bothra’s high picks

Kunal Bothra of kunalbothra.co.in says the market has witnessed one of many significantly better weeks, not solely due to particular stocks but additionally an all-round efficiency, led by PSU banks and Financial institution Nifty.

The 15,000 mark is right here for the Nifty 50 benchmark, though we couldn’t fairly maintain on to it. What subsequent are you mapping on the Nifty?
So it’s a 12 months and a month of landmarks for the indices. First, the S&P BSE Sensex index took out the 50,000 mark, and now the Nifty hit 15,000. Allow us to simply hope that this uptrend would in all probability proceed for no less than some extra time earlier than we go right into a little bit of a pause. However this week was a very stellar type of week for the markets. It was not simply the index worth strikes, but additionally the type of ferocious upticks which you noticed into stocks. It was as if the bulls have been simply let free within the markets in lots of particular person stocks. So I don’t keep in mind final time seeing SBI up 10% proper on the open, which we noticed on Friday. So, I believe, that was a little bit of a uncommon sight to see. After price range as effectively, I believe the markets bought again into the thick of shopping for frenzy. As you talked about accurately, aside from the Nifty IT index, which underperformed however nonetheless closed within the constructive territory, you continue to have so most of the different sectors and stocks that look enticing, whether or not it’s metallic or realty stocks or PSU banks. Even the non-public banking stocks like ICICI Financial institution as effectively managed to hit again and make contemporary highs for themselves. So, I believe, the markets are abuzz with a whole lot of stock-specific motion, and I believe that provides to a whole lot of positivity for merchants who’re searching for stock-specific worth motion. So, whether or not you might be using momentum which is there in particular pockets of stocks and sectors, or taking a look at taking part in contrarian methods… For instance, what occurred with pharma names. I believe Dr Reddy’s was down some 20 per cent or 25 per cent, if I’m not unsuitable, from its 52-week excessive. Have a look at how the inventory has managed to get better. The identical has been the case with many of those different pharma names which have been going via a restoration. So, all in all, I imagine it was one of many significantly better weeks for the markets, not due to particular person, particular stocks, but additionally I believe an all-round efficiency available in the market, led, in fact, by the PSU banking stocks and the Financial institution Nifty general.

Auto stocks have emerged as soon as once more as a theme that has held out. We have now seen the strikes on Tata Motors earlier than Friday, which is when the markets did cool off. As an example, Apollo Tyres, Balkrishna Industries have been the stocks that we now have been discussing commonly. However the place can one nonetheless go lengthy? The place do you’re feeling there’s nonetheless room to make additional cash?
So, there must be Tata Motors, which must be on high of the checklist. I believe even M&M, which has been an enormous underperformer in final 3-Four years, can be attempting to come back again to its prime mode. The inventory has been buying and selling very near the Rs 800-840 mark, and appears pretty enticing. And there’s this renewed vigour, which is clearly seen in these non-prime F&O stocks. There, we used to at all times restrict our dialogue at any time when we mentioned the auto pack, specifically large-cap names corresponding to Hero MotoCorp, Bajaj Auto and, possibly, Maruti. The markets have given cognizance in direction of the opposite underperformers and given them extra impetus. Have a look at the worth actions which have occurred. So, it is a clear indication that the long-term development and trajectory for these stocks is ready on the upside. Now, what occurs is a perfect technique. Do you actually purchase momentum into these names or look out for phases the place these stocks undergo a silent correction, and are available again to some imply retracement or help stage after which look to enter? I believe the latter may very well be a significantly better technique. So there’s a have to determine themes. I believe Tata Motors and M&M are best candidates for a a lot long-term development on the upside. However then, for those who attempt to use corrections like what occurred final week; if I’m not unsuitable, Tata Motors was at Rs 265-270 ranges and had gone via a 10 per cent correction… If there’s a interval of 10-15 per cent correction, which occurred into these names, that must be an excellent shopping for alternative or no less than an averaging alternative for somebody who in all probability has been holding on to them for a very long time at a lot greater ranges.

What precisely are your high concepts for the following week?
Nicely, I will probably be recommending a few purchase calls, and the theme has now shifted in direction of just a few high-beta and low-beta pockets. So I’m suggesting the primary one, which is a ‘purchase’ on Graphite India. That inventory has proven superb momentum. I believe final week, particularly on Friday, we noticed the inventory closing at its highest level of the week in addition to of the day. The momentum has been extraordinarily sturdy. Have a look at the weekly charts, and there are some sturdy indications of breakouts on the weekly charts for Graphite. So I for one imagine that positionally, the inventory must be in line for breaking even that Rs 440-450 mark as effectively. However from a really close to time period view, I believe merchants might take a look at a possible goal of Rs 400 on Graphite. I’d recommend a ‘purchase’ with a goal of Rs 330 within the close to time period. The second could be a barely decrease danger type of identify. As I used to be discussing earlier that most of the pharma stocks made a really sturdy comeback. Lupin was one of many stocks that have been additionally in line for making a really sturdy comeback. The inventory, which apparently fell virtually 10 per cent after earnings, has already retraced greater than 61.eight per cent, which is a basic demarcation that it has ended its correction, and is now resuming a development on the upside. So, I believe, Lupin may very well be a inventory which may very well be in focus over the following 1-2 weeks. I’d recommend a ‘purchase’ with a goal of Rs 1,150 and a cease loss may very well be stored at Rs 1,020.