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Nifty at 12,000 on the cards in a couple of months: Rishi Kohli, ProAlpha Advisors

Rupee likely to remain in a range between 68 and 70-71, says ProAlpha CEO.

ET Now|
Updated: Mar 19, 2019, 12.16 PM IST
Rishi Kohli, ProAlpha Advisors-1200
The next 200 points could see some volatility or range -bound behaviour, but overall the trend is pretty clearly on the upside, said Rishi Kohli, CEO, ProAlpha Advisors, in an interview with ETNOW.

Edited excerpts:

We have seen a fantastic runup and the word is that despite the profit-booking or tapering that we have seen in today’s trade, the momentum is building right now. Would you agree?

Yes I do agree. I have been pretty positive on markets while there was a lot of volatility going on and the view was very clear that 11,250 is very much on the cards in the near term and that zone has been broken through with a lot of momentum.

Given that the last 500 points upmove on the Nifty has been pretty much non-stop, obviously there could be a halt for a week or two, especially on the Nifty. If you look at Nifty futures, then 11,550 to 11,650 is a short-term resistance zone and then you have the 793 kind of levels which are the previous highs.

The next 200 points could see some volatility or range -bound behaviour, but overall the trend is pretty clearly on the upside and while the lower levels were defended in the earlier decline in September-October and the range bound movement after that, it seems very clear that 12,000 is on the cards in a couple of months. That is the overall view for the next few months. Short-term volatility should be taken advantage of that view.

I am curious about the view on the IT space because you seem to have increased allocation on Tech Mahindra. Since the rupee is moving from strength to strength, is that a worry when it comes to the overall margin?

Overall yes, but the rupee has been depreciating continuously for so long and obviously we had the sharp spike from 72 to almost 75, 74.5 or whatever and from there it has appreciated right now to about 68.5. But I think going below 67.5-68, will be very difficult for the rupee. At best it will remain in a sort of range between 68 and 70-71 zone and from there, over the next few years, there would be a depreciation because that is related more to macro.

I do not think there is any case for a very sharp appreciation which is long-term in nature. There can be short-term movements here and there. From that perspective, I am not worried and coming to Tech Mahindra specifically, there is technically a very strong long-term cup and handle formation which looks to be on the verge of a break-out, which with the break to new highs will get confirmed. That has happened in the last one month and the minor decline seen after the strong breakout has taken support at previous highs.

It is very copy-book pattern and giving a target of 1100 which even from a fundamental perspective PEs and all, looks like a reasonable target. Otherwise, business has been doing well.

Earlier bottoming out of the telecom sector and other things that we have spoken of in the past seems to be happening in line with expectations. Given that the fundamental picture is in line with expectations, rupee in the long run will not be a worry for this stock. The technical strong picture seems to have a target of 1100 and that could happen in like six to nine months. A 30-35% upside is clearly warranted in the portfolio.

What is your take on auto? On one hand we have had so much to talk about the consumption story but in the immediate term, it still looks like that pressure is really mounting on some of the auto majors?

Yes, and that has been the case over last year. Almost the entire auto segment has been weak and whether it is two-wheelers or four-wheelers, everything has been underperforming. I have had Eicher in the portfolio and we have discussed multiple times on this show if that looks interesting or not and why.

The last time around, it was hovering around Rs 20,000 levels and I was clear that let it be short term for now because obviously it looks like some things can get extended but a bounce from Rs 20,000 to Rs 24,000 looked to be on the cards. I had held on to it for that.

It did bounce up to around 23,000 levels and then consolidated between 22,000 and 23,000. I do feel that 24000 will come and then either some trimming or some rebalancing can happen. So that is regarding the portfolio, but otherwise I think stocks like Maruti, Tata Motors, Mahindra still need some time to recover.

But having said that, the downsides from here on seem limited so in a staggered way, one could enter it from a medium to long-term perspective. One interesting stock in that segment is Bajaj Auto. It was doing nothing for a long time and recently at least on the technical long term charts, it started turning around and broken out of long-term resistance trendlines. That is one I would focus on.

The plans to buy this large stake in MindTree to a certain extent has led to a fall in the value of the software services arm of L&T. CCD is also in focus. The latest news says the co-founder has said this is going to be a hostile bid which he wants to prevent. What is your outlook on the news flow so far?

The news is pretty much out there. The synergies was discussed apparently but I would still go with Mindtree because the stock per se is fundamentally good. In such kind of a hostile takeover situation, the minority shareholders will gain because if it gets messy, then both sides will bid higher to protect their stake. This is a very simplistic analysis but I have seen in many cases in the past even globally how that works. Given the underlying positivity on the fundamental side, there is no downside on that approach. I would go with that view and hold the stock.

Let us talk about OMCs. Would you add them to your basket?

Yes, I would. Last month’s move was very strong after the decline. On any dips from here on, I would get into it. The medium term signals have gone into positive from negative. From a six-nine month view, I would be long that but I would wait for a slightly lower levels to get into some of them.

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Nifty, Bank Nifty point to more upside in runup to interim Budget: Rishi Kohli, ProAlpha Advisors

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