The markets have seen a bit of a wobble in the last week and even started Monday on a weak note. JM Financial's Rahul Sharma expects the Nifty50 may correct to 15,900 from its current level of 16,500 approximately in the next 2-3 weeks.
On CNBC-TV18’s new segment, Charting Trends, Rahul Sharma, the Head of Technicals and Derivatives Research at JM Financial Services discussed this and laid down his preferred picks.
“Technically speaking, a pause or intra-quarter correction or a small healthy correction will only make the overall market more attractive and the set up slightly more palpable for fresh investors, fresh money to come in,” he said.
“The set-up is such that we have done well and now probably in the last couple of weeks, there are indications that there is a slight bit of a slowdown on the momentum front and we may be in for a possible correction,” he shared.
Friday, August 20, was the first session where Nifty slipped and there was no fresh buying seen.
"Clearly, this is suggesting that there is a bit of distribution happening at these levels. We feel 15,900 is something that could be challenged in the next two three weeks. Broadly, base of 15,000 is somewhere it will complete its 8-10 percent correction from the peak, that will be a very good level to re-enter or look for taking fresh positions,” Sharma analysed.
Sharma is bullish on metals with the kind of performance witnessed in recent sessions.
"On the weekly charts, there is a bearish divergence which is building up on most of the metal names, if you see the daily charts, most of them are very close or below the 50-day moving average (DMA). So at this point in time, sector leaders like metals are showing signs of profit booking indicating that we may be in for a slightly deeper cut.”
Overall telecom sector looks positive to Sharma and he believes that Bharti Airtel has been in a consolidation for the last 14 years and that might be coming to an end.
"We may see a closing above this breakout point above Rs 600. This is clearly indicating that there is a big shift that has happened on this stock, we saw the stock doing fairly well in the last month and the outperformance should continue. Fundamentally, the market is remaining like a duopoly as of now, that is indicating that there is more upside in something like Bharti Airtel. If somebody has to play a pure-play telecom sector, Bharti Airtel is the leader. Rs 800-850 target in the next 12 months is very much possible on Bharti Airtel. As an investor one should stay put,” he explained.
He believes a lot of money has come into the consumption space in the last week. “This is clearly indicating that there is a mega-shift that is happening where money is chasing defensive stocks broadly because Nifty has reached such peaks and making it more risky to invest fresh money. Clearly, from a relative strength perspective, next three-four weeks FMCG could do well. Something like Dabur, Hindustan Unilever Ltd (HUL), Nestle, Britannia – on the F&O side these are fairly under-owned. So I think a lot of money will chase these defensive names and the FMCG index could do very well,” he shared.
“This is one sector which clearly looks very hot in the short-term,” he added.
For the full interview, watch the accompanying video.