The market seemed ready to rollover just before the budget on Feb 1. But as the budget was being announced, there was a huge rally that spread across almost all sectors. #Nifty was up +4.7% and 2.6% on Feb 1 and Feb 2 respectively and made a recent high on Feb 16. Since then, it has been struggling to move back up and looks ready to roll over again.
Portfolio Allocation: Looking at the setups of some current leaders, I have a few test trades with small allocation right now. These will guide me whether to increase my exposure over the coming days and weeks.
Here is what I am seeing currently on the sector level:
– Secular trends (leadership in 3m+ period) continue to persist in Software and Trading companies (eg, Indiamart). Most of the stocks in these sectors have been rangebound/declining for the past 3 months or so. Whether it is a time correction or a sign of an impending downtrend in overall market, time will tell.
– New leaders have started emerging in Retail (eg. Vmart), Professional Services (eg. Quess, Teamlease etc.) and lot of re-opening related plays.
– Financials drove the whole market up since November last year and are taking a breather right now.
– Chemicals participated on the upside post Covid upto September/October and then lost leadership for 5-6months. They have started moving again in the last one month or so. So that’s another area to keep an eye on for the next run up.
– Metals is another area which is grabbing global attention. Stocks (Hindustan Copper, Vedanta, Tata Steel etc) have a nice tailwind with the global inflation narrative. Some allocation in this sector with right risk reward would be advisable.
– Cement companies seem to have a consistent bid as well. With re-opening, this sector is expected to contribute to growth in this fiscal.
Few names that look interesting right now for Long exposure – in no particular order of preference:
Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.
Disclaimer: This is not investment advice, please do your research before committing capital.
Very Good article. Good observations.