Festive cheer to boost demand; Dr Lal Pathlabs among top 3 stocks to give 13-16% return: Mohit Nigam

“The rebound in midcaps and smallcaps is aided by various factors such as fall in commodity prices, festive demand, better growth prospects of Indian economy, better visibility expected in H2FY23,” says Mohit Nigam, Head - PMS, Hem Securities. In an interview with ETMarkets, Nigam said “We believe markets will remain upbeat on the back of strong demand scenario amid the upcoming festive season, and 20% to your financial goals.” Edited excerpts:

A volatile week for Indian markets where benchmark indices faced resistance near key resistance levels, but bulls remained firmly in control. What led to the price action?
The market had a rough start to the week before picking up momentum later. Both Sensex and Nifty50 rose by approximately 1% for the week.

Foreign portfolio investors (FPIs) upped their stock market investments in the first week of October. Despite the volatility in the global stock market, FPIs have invested more than Rs 2,440 crore in India so far in October.

Businesses have started releasing quarterly results for the September quarter, which has contributed to the market's resiliency.

The following week will be crucial because of the large amount of macroeconomic data that will be revealed on the economic front.

The following week will also see the commencement of the corporate results phase for Indian businesses, which will act as triggers for stock-specific action.

After a 1% rally in the week gone by where do you see Nifty heading in the coming week?
The Nifty50 is expected to face short-term turbulence as investors have become cautious of further aggressive rate hikes by the US Fed after the release of US Job data last Friday.

The US unemployment rate fell to 3.5% showing that the economy maintained an upward trajectory despite interest rate hikes. Investors have become cautious as they see a prolonged interest rate hike scenario in order to curb rising inflation. The US indices saw a sharp fall last night. SGX Nifty reacted to the same and closed almost 250 points down.

We believe that the Nifty50 will remain volatile in the coming week amid negative signals from global markets. Overall, we believe that the market will remain upbeat on the back of a strong demand scenario amid the upcoming festive season.

Small & Midcap stocks outperformed benchmark indices. Is it the festive cheer or short coverings?
The rebound in equity markets has improved the overall sentiments and risk appetite of investors. The mid-caps and small-cap have higher beta but higher rewards are also associated with them.

The rebound in mid-caps and small cap is aided by various factors such as a fall in commodity prices, festive demand, better growth prospects of the Indian economy, and better visibility expected in H2FY23.

How are FIIs placed in the festive month? Do you think the worst is in the price?
Some of the reasons behind the recent FII sell-off are the weakening of INR against USD and aggressive rate hikes by the US Fed.

We believe that a large portion of FII selling in the Indian markets is over and we may witness FII inflows again; however, it is difficult to comment on the exact point.

The long-term growth drivers of the Indian economy are intact which will keep attracting FIIs.

Sectorally, metals and capital goods stocks led the gainers pack among indices. What led to the price action?
Metal sector saw a good bounce back last week as investors are expecting a return of demand scenario.

Metal prices are expected to remain stable in the upcoming quarters after the heavy turbulence which was witnessed in the last 2 quarters amid a drop in the global demand scenario.

APL Apollo was the biggest gainer in Nifty Metal as the company reported the highest-ever quarterly volume sales.

Capital goods remained in traction as the FII fortnight data showed good money inflow in capital goods. Softening of metal prices which is a key raw material for the capital goods industry also uplifted investor sentiments

Any 3-4 trading ideas for the long term?
Here is a list of ideas for the long term:

Dr. Lal Pathlabs: Buy | Target Rs 2,800 | LTP Rs 2,443| Upside 14%
Diagnostic stocks were in corrective mode for quite some months now but in recent trading sessions, the stock has started making higher highs and higher lows. Therefore, we advise the investors to make a fresh entry with a target of Rs 2,800.

Jubilant FoodWorks: Buy | Target Rs 720 | LTP Rs 618 | Upside 16%
Since the festive season is around the corner, we can witness an increase in out-of-home eating habits. After good correction, the company is ready to resume its upward movement. We advise investors to make an entry with a target of Rs 720.

Radico Khaitan: Buy | Target Rs 1,200 | LTP Rs 1,061 | Upside 13%
The stock has given a strong reversal from the recent breakout zone and is currently trading near its support zone. Hence, we recommend buying the stock for the target of Rs 1,200.

Disclaimer: Hem Securities and its associates, officers, directors, employees, individuals employed as research analysts, and their relatives worldwide may from time to time have long or short positions in the company(ies) mentioned herein.

(Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)