Rahul Sharma, Director & Head – Technical & Derivatives Research, JM Financial Services, says “going ahead, it is all about sticking to the strength, which is largecaps. We feel that is where the alpha generation will be. However, if you are a slightly more medium to long term investor, a lot of these smallcaps and midcap names have a good risk-reward at these prices and this is a good time to start accumulating these stocks which have been hammered 20%, 30%, 40% in the recent correction.” For the financial year we are seeing very good gains in Nifty. Today also the markets are up and there is expiry as well. What outlook should one expect now in terms of the markets in FY25? Should we expect more of this green?
Rahul Sharma: It is quite a closing for the financial year, the way Nifty has behaved in the last two to three trading sessions. The good thing is the correction seems to be over, especially after Nifty has given a crossover above the 22,200 resistance area and now we are ready for 22,600 and above. As we have seen in the past, corrections have been bought into and this time also, it does not seem any different.

Now the quality of the bounce back is especially good in largecaps. If you compare some of the sector leaders like DLF from real estate or even Bajaj Finance, which was an underperformer in the Nifty 50 space and to top it up, the PSU banks which have been doing well, the sector leaders have started doing well. That has done two things, the correction in Nifty has been shallow and the recovery is much better in terms of the strength of the bounce back.

Now going ahead, it is simply all about sticking to the strength, which is largecaps. We feel that is where the alpha generation will be. However, if you are a slightly more medium to long term investor, a lot of these smallcaps and midcap names have a good risk-reward at these prices. So, if you are an investor, this is a good time to start accumulating these stocks which have been hammered 20%, 30%, 40% in the recent correction.

If you are a trader looking for short-term gains, in April, at least in the first half, largecaps should take the centrestage.

In terms of specific stocks, let us talk about what we have and what we are seeing in a good up move. Today, in terms of volumes, we are seeing traction coming in IDFC First Bank, IDFC. What is the view on these two stocks if you could look at them in terms of charts?
Rahul Sharma: When it comes to the IDFC twins, they have seen their fair share of correction along with the mid and smallcap space. Now, looking at these two stocks, especially IDFC First Bank, that is in oversold territory, a bit of bounce back is what we can expect from these levels. Today, the volumes are pretty significant especially in IDFC First Bank.

On the other hand, IDFC Limited is relatively better placed and in terms of the relative comparison, this could outperform in the short term. My sense is, it is better to look at, like I said, stocks which are relatively better placed. So, even in the private banking space, it is best to stick with larger names like ICICI Bank, Axis Bank which are performing relatively well and are now set to take out their previous highs. It is best to avoid these smaller names for the time being. Once the largecaps are done with the move, that is when the momentum could spill over to the smaller names.