Mid and Small Cap Picks: ETMarkets Smart Talk: In Earnings Season, Go for Stocks Specific to Mid and Small Caps: Arpit Jain, Arihant Capital

“Indian equity markets rallied on firm global signals, which were pushed higher by short hedging, said Arpit Jainmixed doctor, , in an interview with ETMarkets. Additionally, Bank Nifty is expected to outperform the September 2022 quarter business update for most banks and is positive with higher credit growth,” Jain said. Edited excerpts:

The Nifty 50 index settled the week around 17,200. What lifted the market mood? What are the main support and resistance levels of the index?
After remaining cautious until Thursday, Indian stock markets rallied strongly on Friday on strong global signals and lower crude oil prices. Among Asian markets, Tokyo, Hang Seng and China made impressive gains on Friday. The rally in US markets, mainly driven by hedging short positions, fueled positive sentiment. Banking and IT stocks led the rally while Infosys’ impressive quarterly results bolstered green sentiment.

Technically, we are of the opinion that the 16,800 level on a weekly closing basis is a decisive level. This week, Nifty tested the 200-day SMA (16,986) by reaching a low of 16,950 and bounced to close above, forming a “Doji” candlestick pattern. This gives a small hint that the previous downtrend is running out of steam. Right now, the immediate resistance is at the 17,428 level. Any move above the 17,428 level with higher volumes than yesterday would propel Nifty to test the 17,630-17,860 levels within weeks. In contrast, support is at 17,112 -16,986–16,800 levels.

Outperforming the Nifty50 index, Nifty Bank hovered around 40,000 levels. Do you see its outperformance continuing in the days to come? If so, what actions are likely to drive the gains?
Bank Nifty is expected to outperform as the Q2 FY23 business update for most banks is positive with higher credit growth. Nifty Bank is also showing higher relative strength and will continue to do so. The

came out with good results. Based on the numbers and high relative strength, Federal Bank looks good. For the other banks, we would like to see results first, but IDFC Bank is also showing signs of higher relative strength, technically speaking.

The midcap and smallcap indices have underperformed over the past week but settled into positive territory. Do you see them joining the party in the coming weeks? What are your best midcap and smallcap picks on a positional basis?

After an initial rally, mid and small caps are consolidating and it is highly likely that the bullish momentum will continue on these stocks.

Back to recommendation stories

As we enter earnings season, we will see stock-specific performance due to actual results. In the midcap space, we like GHCL, , & rice exporting companies like KRBL & . One can also look at Shree Renuka, , and Industrial Ltd, RK forge and .

The computer pack hogged all the highlights with a host of blue chip and midcap counters announcing their gains. What are your top picks in this space?

Currently, we are positive on large cap IT stocks; Infosys and TCS remain our top picks.

Heading into the holiday season, auto stocks lost some shine. Do you think investors should be careful with automakers? What actions would you recommend playing in the current scenario?

This sector still shows higher relative strength against the benchmarks and is now showing signs of correction in a strong uptrend.

posted good numbers 2QFY23. As more companies report results, this will provide more clarity. However, one can watch TVS Motors Company Ltd and . in a corrective movement of the technical front.

Amid rising interest rates, real estate stocks took a hit. Do you think real estate as a sector has more steam or its dream is outdated? Suggest some IT stocks to play in the short term

Care should be taken when investing in the real estate sector, because on the technical charts, the Nifty real estate sector is underperforming the benchmarks, so it can be avoided. However, as there is renewed interest in office space, investors may consider real estate REITs.

What should investors’ strategy be to navigate this volatile market? How can they protect their wealth and make a decent return? What stocks an investor can buy in the short to medium term to earn a decent amount.
Indian stock markets have been volatile for some time; however, the recent recovery has provided relief to investors and helped markets rally to near all-time highs.

It should be understood that volatility is normal and part of the game. As a savvy investor, you can surf volatility by relying on basic investment principles:

  • Diversification: It supports portfolios during market declines.
  • It is about time in the markets and not the moment. So stay put and watch this time to review your portfolio and make sure you’ve picked the right companies with strong fundamentals.
  • Stay invested – don’t let fear or greed guide your investment strategy.

While the volatility can be daunting, and we believe it will last for some time, we recommend investors look for buying opportunities at every dip and invest in fundamentally strong companies. The best strategy in times of volatility is to keep your cool and stick to your investment plan.

For short-term opportunities, traders with high risk appetite can buy

(CMP Rs 54) with a target of Rs 74 – Rs 92, while holding a stop loss at Rs 44. And also, RK Forgings (CMP Rs 224) with a target of Rs 280 – Rs 320 and holding a stop loss at Rs 190. These are on a technical basis.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts belong to them. These do not represent the views of Economic Times)

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