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Rahul Sharma, Director & Head – Technical & Derivatives Research, JM Financial Services, says “the bull market is very much on. Individual stocks may witness correction because there was definitely a lot of euphoria and over-optimism, especially in smallcaps. So, there we are seeing pullbacks happening. But once the largecaps are done with, the second leg of the rally could very well spill over to the mid and smallcaps which is where we might see another rally happening, possibly in April and ahead.” I must say that you have caught the market moves, the swings of the market last few months very nicely and we are at 22,500 now. Is the shakeout which the broader market saw for the last 7-10 days, is over now or would the texture of the market remain tilted toward largecaps, at least for the full series?
Rahul Sharma: Shakeouts are good and that is exactly what we have seen happening in this consolidation. The texture of the market is still buy-on-dips and it is still positive. On one hand, the Nifty has broken out from this consolidation that we had from the last eight to nine weeks and the Nifty now seems to be heading towards higher highs, possibly 23,000 is very much on the cards.

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So far the pain point for the market had been Bank Nifty; but that has also come out of the rut that it was in and seems ready to head towards the 50,000 mark. Clearly, the largecaps are leading after this consolidation and mid and smallcaps may rejoin the party once largecaps are done with. My sense is that this bull market is very much on. Individual stocks may witness correction because there was definitely a lot of euphoria and over-optimism, especially in smallcaps. So, there we are seeing pullbacks happening.

But my sense is once the largecaps are done with, the second leg of the rally could very well spill over to the mid and smallcaps which is where we might see another rally happening, possibly in the month of April and ahead. So, both Nifty and Bank Nifty look pretty solid to me on the charts and there is more upside to be had in the coming few weeks.

I would like to understand the charts of four stocks from you because there have been big block deals which have happened in today’s session in these four and typically whenever there is a big block deal, the interest for HNI and retail comes in. First is Bharti, Macrotech, Zomato and SBFC, which is down 8%. You can start with Bharti at Rs 1200.
Rahul Sharma: In fact, it technically crossed its previous high and with very good momentum and my sense is the trend definitely should favour the bulls going ahead from here. So, the trend remains very much positive. We should very well be headed towards 1250-1280 in the short term in Bharti Airtel and on the charts, the stock looks pretty solid, especially after the 50-20 days consolidation that we had.

As far as the other names are concerned, something like Macrotech is in a sector which is primarily doing very well, which is the real estate space and this stock is also a very similar setup, 15-20 days of consolidation. Then, a trigger comes in and the follow up buying takes up the stock higher. In fact, most of the names that we have discussed look like these are ideal candidates especially after the recent time correction that we have seen, we should see momentum moves happening in these names.

Also, there is M&M also. A block deal is taking place in that particular counter. You have seen the stock actually under pressure and what is your view coming in on the entire auto pack as well? Where do you see this headed – be it the two-wheeler or four-wheeler counters?
Rahul Sharma: The auto index has been doing fairly well. Although of late, the momentum slowed down a bit, there are no signs of a price breakdown in the auto index. As far as M&M is concerned, the stock has been in a primary uptrend. In fact, the current correction is a good buying opportunity, I would say. Maybe one can look to accumulate in the next 50 to 60 point range on the downside.

We are trading very close to the 20-day moving average, maybe around 1850. The risk reward becomes favourable again for longs. On the way up, we could very well see the stock head towards the 2000 mark. My sense is there is no problem in this sectoral index as such and after today’s block deal, especially after the prices eventually showing a bit of a pause and a correction, It is an ideal buy-on-dip candidate. Around Rs 50 lower, one can look to buy with a stop loss of Rs 1800 and a possible 10% upside can be had in about a couple of weeks’ time.The IIFL Finance stock got a very good rebound in today’s session after two 20% down circuits. Is it a good time to get in, even now?
Rahul Sharma: We have seen time and again that after stocks taking a beating, the recovery has been pretty fast. My sense is probably to let the volatility settle a bit. At this point in time, the risk reward is not really great. It is more like one is to one. After a bit of a time correction, we will look to get into it. At this point in time, one can look to avoid.

Maybe there are some better names in the space which can be looked upon, like IT is one sector which is turning around after this correction. In fact, Wipro is something that we like in particular, which can do well from current levels. The entire IT pack looks good. Wipro looks good specifically for a target of Rs 550, 580 on the upside and positionally can be bought with a stop loss of 500 on the closing basis.

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