Although broader market indices i.e. the S&P BSE Small-cap index and the S&P BSE Mid-cap index closed with gains of over 5 percent each but more than 100 stocks in the BSE500 index rallied 10-80% in July.
Bulls pushed benchmark indices above their crucial resistance
levels in July but profit-taking in the last week of July capped the upside.
The S&P BSE Sensex and Nifty50 rallied over 7 percent each in July but the
real action was in select mid & small-cap space.
Although broader market indices i.e. the S&P BSE Small-cap
index and the S&P BSE Mid-cap index closed with gains of over 5 percent
each but more than 100 stocks in the BSE500 index rallied 10-80% in July.
There are as many as 126 stocks in the S&P BSE 500 index
which rallied 10-80% in the month of July that include names like Cadila
Healthcare, PVR, Bank of Maharashtra, M&M, Dr Lal Pathlabs, Heritage Foods,
L&T Infotech, and Laurus Labs, etc. among others.
Experts are of the view that due to underperformance in the
broader market space, smart buying is happening in select quality stocks.
However, the right approach would be to enter this space in a staggered way
rather than making a lump sum payment.
“Most frontline stocks may have risen excessively
portraying high valuations but select mid and small caps are certainly not
trading at high multiples, they are decently priced some even undervalued,”
Umesh Mehta, Head of Research, Samco Group told Moneycontrol.
“Hence, selective buying in
certain pockets of the broader markets can entice investors in their search for
value. A staggered buying strategy through SIPs in fundamentally strong small
and mid-cap stocks is the right approach, especially when they are trading at
decent valuations but buying lump sum at current is not advisable,” he said.
Technical Outlook:
Weakness in the heavyweights like Reliance Industries and HDFC
twins drove the headline index – Nifty50 lower. The Nifty50 formed a bullish
candle on the monthly charts; however, some profit-taking was seen in the last
week of July.
Overall, Nifty seems to be consolidating sideways in a range as
it has entered the GAP zone which was created due to the massive selloff witnessed
in the March early this year.
Experts are of the view that on the upside 11300-11400 levels
are likely to act as stiff resistance while on the downside 11000-11040 will
act as a crucial support zone.
“On the upside 11300-11400 is the supply zone which also happens
to be the upper end of the GAP area and on the downside 11040 is the demand
zone. Any significant move will be witnessed on a breakout from this trading
range,” Aditya Agarwala, Senior Technical Analyst - Institutional Equities, YES
SECURITIES told Moneycontrol.
“Following two strong expires from the point of view of bulls,
the Nifty could take a pause and may witness minor profit booking while broader
markets may continue to rise,” he said.
Agarwala further added that the Nifty is facing resistance at
the 78.6% retracement placed at 11400 which also happens to be the GAP area,
failure to break out of this resistance may invite bears to push the Index
lower to 10800. Therefore, Nifty in Aug series may trade with mild weakness.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions (and same applies to sd solutions as well)
Source - Moneycontrol.com
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