US markets are running on stimulus hope and domestically, it will make sense to be very cautious while trading in short-term players, says Rahul Sharma, market strategist and research head (equity), Equity99 Advisors.
On near-term factors at play in the market
In September, the Nifty fell to 10,800 from 11,600 and then it rebounded to 11,600. The traders got stuck very badly in this spate of volatility. Both short and long players got stuck on each side. Neither of them made money. But whosoever was in line with the market trend made money. Till the US election is not over, this volatility will continue, Post November 15, we are expecting a little more stability in the market even if it corrects a bit. US markets are running on stimulus hope and domestically, it will make sense to be very cautious while trading in short-term players. Work with a strict stop-loss and buy-on-decline strategy and invest in a staggered manner.
There are a few factors which are very positive for the market. First of all, auto sales numbers are very attractive and better than last year’s. GST numbers have also improved compared with last year and though small enterprises were allowed to submit till September what was due in March, still the numbers are very positive.
On PNB Housing & NBFC space
PNB Housing is my selection. In case of other HFCs like HDFC Ltd, their business is very near the pre-Covid level and some foreign funds have upgraded their ratings as well. HDFC Ltd is nearly 7% up and LIC Housing is also 6-7% up. In the case of PNB Housing, last one year was not good but before that it had shown a really good growth rate. The IL&FS and DHFL issues had impacted this HFC, but PNB Housing has the backing of PNB and so liquidity is not a concern for the company.
We believe this stock is ready for a good upside move in the short term. In 2017, this stock was trading at around Rs 1,600-1,700 levels and now it is available at below Rs 330. In the short to medium term, this stock has got a really good potential and the target for PNB Housing would be Rs 400-425 as there is a big breakout after Rs 350 and Rs 352 levels technically. My stop-loss would be placed at Rs 320.
On auto ancillaries and Sundram Fasteners
We used to have a negative view on the auto ancillary sector but as we see a rebound in the same sector, we expect this sector to perform in the coming days. As we all can see a good numbers’ spike from the auto sector in August and September, it indicates that the going further, this sector will show good performance. Sundram Fasteners is a TVS Group company which is famous for manufacturing automotive components and has a prominent name in the market and a strong history as well.
Looking at PE numbers, you will feel that the stock is overvalued but the company has performed well given its good performance in the past. The company has created good wealth for the shareholders. The auto ancillaries will start shining gradually and companies like Sundram Fasteners will surely do well for the investors and the shareholders, as it has been doing in the past. Positional traders can pick this stock with their position at the current market price with a target of Rs 480 to 500 and keeping stop loss at Rs 390.
On Dilip Buildcon & construction sector
We had recommended Dilip Buildcon when it was around Rs 280 two months ago. The target price at that time was Rs 400 and in one month, it reached a high of Rs 420 and now the stock is available at Rs 350 again. Dilip Buildcon is sitting on the largest order book in its history. The company is also very well known for the execution ratio and delivering before time. Their order book is much diversified as it has orders from 15 to 18 states and they are working on various projects which are not limited to the road construction.
Overall, the valuations are very much attractive for this company and keeping a horizon of six months, we have placed a target of Rs 425-450 and the stop loss will be Rs 315 for Dilip Buildcon Limited.
Download The Economic Times News App to get Daily Market Updates & Live Business News.