stock recommendations: Aditya Arora on top stock pick from cement sector

“So, from today onwards 26,500 is an important mark which was a high for Friday. Post that gap up, we have filled that gap and we are still continuing with the downside. So, I believe now 26,400, 26,500 is an important resistance point on Nifty Futures,” says Aditya Arora, Adlytick.

First of all, help us with your take on the benchmark indices because believe that you were not holding that positive stance on the markets. Given the fall, help us understand how do you see the markets moving ahead? Are we in for some more correction or the markets can find some ground here?
Aditya Arora: Look, today tables have turned and it is an important pivot point because since last 20-30 days midcaps and smallcaps were underperforming and largecaps were outperforming. Today it is an important reversal day wherein largecaps are underperforming. Look at Reliance Industries, it has given up all the gains which it had made on Friday, so that is important and look at other IT majors also, they are also underperforming.

So, from today onwards 26,500 is an important mark which was a high for Friday. Post that gap up, we have filled that gap and we are still continuing with the downside. So, I believe now 26,400, 26,500 is an important resistance point on Nifty Futures.

Until that is not taken out, one must have a bearish stance on the market. Good news is that all the people who are waiting on the sidelines to deploy cash, they have a good news that Nifty may soon hit lower levels which could be around 25,700 to 25,300 on Nifty Futures. So, I think there is more downside of 300 to 700 points on Nifty and same is true for Bank Nifty. And it is a good shorting opportunity for bears.

What is your take then coming in for the broader markets because today they are definitely trying to shine brighter, at least showing the way where the money is being deployed looks like in this downturn.
Aditya Arora: Look, some pockets are doing well. Just look at Nifty Metal space, JSW Steel is hitting new high. So, I like that candidate from metal pack. Adani Enterprise is also doing well. Just to point out how that being a high beta very sensitive stock is outperforming the market. But I am not specifically saying that I am bullish on Adani but just showing the texture of the market. But if I have to pick one stock, then it would be JSW Steel from the metal pack.

But overall, if we talk about smallcap and midcap space, I feel that somewhere down the line if Nifty will correct, Nifty Mid Cap and Small Cap will also give up their gains and they could fall with 2x beta. So, I do not remain very optimistic on Nifty Mid Cap and Small Cap space. In fact, they are one of the most overvalued pockets of stocks.
So, they are most vulnerable right now. One should avoid them at these levels. At lower levels, they can definitely be bought but it is not the right time to buy smallcaps and midcaps.
Also help us understand the move that we are witnessing on the cement counters. You just flagged off a couple of Adani Group of counters and from the pack, ACC, Ambuja are doing pretty well today. But apart from that, stocks like Dalmia Bharat are also on the roll. Any stock from the cement sector that you wish to highlight or that is looking attractive to you?
Aditya Arora: I think Ambuja Cement looks good, so with such a negative market texture today, it is outperforming with 1% gain, so with this relative strength concept, we can go long on Ambuja at 644, one must maintain stop loss at 633 and target should be 655 to 670.