stock picks: Rohit Srivastava identifies three key sectors to watch in near term

“These are three that stand out, so that is commodities, PSUs, and the financials. Now, there is also oil and gas which is a separate story simply because of what is happening in oil,” says Rohit Srivastava, Founder, Strike Money Analytics & Indiacharts.

Give us a sense of the kind of market moves you are seeing today. We have even broken below the 23,600 mark now. So, what are the next levels that you are spotting on the charts for both Nifty and Nifty Bank because we are seeing some weakness across both of those indices right now.
Rohit Srivastava: After six days of consistent gains on the Nifty and possibly five on Bank Nifty because they did weaken a little bit yesterday as well, we are getting the first pullback. A lot of people were waiting when are we going to get this? Well, you are getting it. But to think that it is going to be significant would probably be wrong. It is just going to be a part of a small one, two, three-day consolidation on the ongoing uptrend, that is how we should consider this.

The immediate support for Nifty will come in at around 23,500 and if I think of the Bank Nifty, then the immediate support should be closer to around 51,150 and closer to those levels, we should see it bottom out and resume the upward trend and head higher, so head higher meaning how far?

I think once we broke beyond 23,000, we have set the course for a larger trend reversal of the entire fall that started from late September to early March and therefore we should at the minimum be doing a 61% retracement of this entire fall, so that takes us to around 24,630 in the coming month, that is what we would be looking for in the Nifty.

In the Bank Nifty, we have probably done much more because it was actually leading in a way. So, we have already retraced 61% the next level, so once we get past this range which is at around 52,150 then we would probably head towards 53,000, so that is what I am looking at in both the key indices.

I just wanted to get your view then on the sector specific, given the fact that you have given us a flavour of what the market or the benchmarks we should expect, but what about sectors? Which sector is looking good to you given the fact that we have seen a sizable correction? Now we are seeing some of them or rather sector rotation actually take place right now, so which sector on the charts are looking nice?
Rohit Srivastava: So, two parts to this, one is, of course, the sector rotation part and second is what is outperforming and where can we get maximum gains if our holding period is at least three months or more. So, when you are thinking slightly more medium term or longer term, then you would want to see which sectors the market has really given credit to over the last one, one-and-a-half month and that puts us in favour of NBFCs within the financials, although financials as a whole also appear to have outperformed. It gets followed up by the PSU stocks and then metal stocks. These are three that stand out, so that is commodities, PSUs, and the financials. Now, there is also oil and gas which is a separate story simply because of what is happening in oil.

So that leaves us with four leading sectors that we would stick to if you are looking at performance that goes slightly more medium to longer term, so those will continue to perform because they are the low hanging fruit or low valuation sectors compared to the high valuation sector, so that is where the money has been going since 2022 and I think that trend will now continue that we have seen a significant correction in some of them especially PSUs where the weekly RSI went from extreme overbought of 92 to oversold of 30 in the last six months, so that is the setup there.

But the second part, which is rotation, one of the sectors which was holding out till December which then became one of the worst performers recently was IT and with the recent bottoming out in the US markets and as we are entering into the next results season, the IT sector seems ready to start picking up in rotation. So, while it has underperformed, it may show you some near-term performance based on that and so one should actually look at that as well.