Book profits in Suzlon Energy, Mazagon Dock, select largecap auto, metal stocks: Aamar Deo Singh of Angel One

After a strong rally in stocks like Suzlon Energy, Mazagon Dock, and Tata Teleservices (Maharashtra), which have given over 20% weekly returns, it is time to book partial profits and trail the balance, says Aamar Deo Singh, Head Advisory, Angel One. He also recommends part profit-booking in largecap metal and auto stocks as some short-term indicators display fatigue in Nifty.

Q: Do you see Nifty hitting a lifetime high next week on current momentum?
Nifty has gained over 10% in the past few months, bottoming out in March 2023, and is in striking distance of its all-time high of 18,887 witnessed in December 2023.

Overall, the uptrend remains intact, but some of the short-term indicators are displaying fatigue, but overall, the bias is in favour of the bulls.

However, we have been witnessing some profit booking at higher levels but given the upside momentum in the market with the broad-based rally, Nifty needs to sustain above the 18,650-18,670 zone for hitting new highs. On the downside, we see immediate support around the 18,200-18,250 zone.

Q: Nifty Bank is nearly 300 points up on a weekly basis, and no major gains were seen despite RBI policy on expected lines. What to expect from bank & financial services stocks?
In the current quarter, Nifty Bank has rallied by over 8% to trade at record levels, and almost all the heavyweights in the banking & financial space contributed to this spectacular rally. However, of late, the HDFC twins appear to have lost momentum with the likes of the State Bank of India (SBI) and Kotak Mahindra Bank.

The RBI policy was already factored in by the market, so there was a muted reaction, as investors are well convinced that the central banks will go slow on hiking interest rates, as the inflationary trend appears to peak out. But still, that’s early days, so it is better to be cautious for any signal that appears to the contrary.
Banking & Financials will be more of a pick-and-choose strategy, and the overall bullish momentum witnessed earlier across the board in this sector might not be the case in the near future, after all.Q: Metal and auto stocks performed relatively well during the week. What should be the strategy for these stocks?
Amongst the major metal stocks, primarily a rally was witnessed in the steel stocks such as Jindal Steel (8.34% WoW), JSW Steel (+5.93%), and Tata Steel (+0.83% WoW), leading to the overall upward move in Nifty Metal index, which ended the week up 1.40%.One should look at booking profits in this sector going forward.

Talking about the auto sector, the Nifty Auto Index was up 3% this week, led by the likes of Tata Motors, Bajaj-Auto, HeroMoto MotoCorp, Ashok Leyland, and M&M, all of these were up by almost 4% this week, clearly indicating a broad-based rally. Investors are advised to book part profits and trail the balance.

Q: There has been great action in broader markets. Do you expect this trend to continue this week?
Overall, markets have witnessed a broad-based rally, indicating an increasing interest amongst investors and a growing sense of cautious optimism, as inflationary trends and global events still weigh on the minds of the investors.

India VIX, around the 11 mark, is a sign of comfort, signalling that investors currently are not perturbed much by the happenings around the globe. Also, we see that more than 65% of the stocks are trading above their 200-day moving average, which is a positive sign, reflecting the underlying strength in the market.

However, letting down one’s guard is never a wise thing to do in the market, as they say, markets are the most unpredictable places on earth. Having said that, focus on quality and valuations, for long-term entry.

Q: What is the market’s expectation from the FOMC meeting outcome scheduled for next week?
The surprise rate hike by the Bank of Canada caught most people off-guard, and given that the US Federal Reserve meets this week, to decide on the future course of action, speculations are rife that the US Fed could continue to adopt an aggressive stance, but most likely, press the pause button this time, analyzing the data, before its next policy meet.

Also, hawkish words by US Fed officials recently suggested that interest rates could remain high for a longer time. Markets have factored in a no-hike scenario currently and are adopting a wait-and-watch policy, with alertness, as to how the event unfolds.

Q: Suzlon, Mazagon Dock, and TTML have seen over 20% gains this week and are the top gainers in the Nifty 500 pack. What should investors do with these stocks
All these stocks witnessed spectacular moves last week, and it’s definitely windfall gains for the investors holding these stocks. Where most people are happy with 20% annualised returns, some stocks have generated 20% returns in a week.

Hence, it is advisable to lock in profits, at least part-profits, so that notional profits do not remain paper profits. Most investors unfortunately are slow at booking profits and unable to capitalize on the gains. So booking some profits and trailing the balance, is a good way to capture the big moves so that one doesn’t miss out on the multi-baggers.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)