Rahul Sharma, associate director and head of technical and derivative research at JM Financial Services, on Tuesday, said some consolidation is a must after sharp corrections.
He said the market is favouring a lot of PSU names, "I think from a medium-term perspective, you could probably create a basket with PSU stocks, especially with the budget coming up, we are very, very bullish on PSU as a theme for the next six months."
Sharma said, "The intelligent investor is a realist who sells to optimists and buy from pessimists. So in short, the next few days, we will be testing times especially given the month volatility coming up and the overall nature of the market which has gone from bearish to extremely bearish in the last trading sessions."
He said, "There are many questions regarding whether this is the start of a bear market. I don't think so. This is purely a correction. We have been waiting for corrections for a long time. After 6-7 months of good performance, a good 10 percent cut from the peak only makes the charts technically even more robust and gives you the opportunity for new money to come into the markets. So overall, we are seeing this as an opportunity to invest, enter at these lower levels around 17,000 should be a good level to enter considering the overall technical setup of the market. I think this week we should very well sort of form a bottom and Nifty should be looking for a smooth sailing December series on the F&O space.”
On stocks and sector, Sharma said, "It is a good time to be shopping in this market. Now we are very closely watching sectors and stocks which haven't corrected as much. In the last two trading sessions, we saw defensives also giving up."
"From the reality space, we could look at something like a DLF, Godrej Properties which have been standing relatively very well. In fact, DLF is the more robust of the two. As far as NBFCs are concerned, I think HDFC is one stock, which is quite robust and should see a decent bounce by coming from these levels. From the banking pack, I think HDFC Bank is one stock, which is available at 100-day exponential moving average, which is a very key level for the stock."
For a full interview, watch the accompanying video...