Nifty50 will soon reach 10,200 levels led by technical factors while global liquidity will add a boost to the on-going market sentiments, said Rahul Sharma, Head of Research, Equity99 Advisors.

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In an interaction with CNBCTV18.com, Sharma said that the Nifty-50 companies are likely to continue to dominate trading and investments for the next few quarters while he believes that the fundamentals of many companies will change in this pandemic.

Here is an edited transcript of the interview:

After three weeks of losing streak, the market surged around 6 percent in the last week of May. What were the factors that triggered the rally even after the country largely remained under lockdown and a constant rise in coronavirus-infected cases?

We had short positions built up in both Bank Nifty and Nifty by Foreign Portfolio Investors (FPI). Ahead of the expiry, we witnessed that these positions being covered by these players. Positive trends in the global market also added to the sentiment. In addition, the expectation that the government will gradually lift the restriction also improved the market sentiment. Better than expected GDP numbers, post markets on Friday also fuelled the rally.

The banks led the rally with Nifty Bank gaining around 12 percent last week. What fuelled the optimism in banking stocks and do you think this positive momentum in banking stocks to continue in July?

The series of measures announced by Reserve Bank of India (RBI) and the stimulus package announced by the government will help most public sector banks to better growth in the coming months. In addition, relaxation in NPA norms will help the banks to better in meeting the provisioning norms.

Speaking about technical analysis for market, after the first three weeks of May month we saw consolidation but last week was a very positive breakout at higher levels. Technically, Nifty and Bank Nifty both are looking on charts. Buy on dips strategy will be good for Nifty and support is placed at 9,710 and 9,380. Similarly, upside resistance is placed at 9,936.18, which can lead us to 10,000 levels.

Do you expect Nifty to cross 10,000 levels soon?

We believe that the markets will cross 10,200 levels soon on-account of various technical reasons and on-going wave count which we follow. We believe that global liquidity will add fuel to the on-going market sentiments.

As of now, we believe that Nifty has formed the bottom around 7,500 -8,000 levels. We see a good possibility will stay in range for which 9,300-9,500, which will act as support and 10,000-10,200-10,400 for upside resistance. If you see Nifty near these support levels, one can watch for buying and similarly one can book profit if you see Nifty near upside resistance levels.

In your opinion, what will be the theme for the markets in view of monsoon, unlocking and low-interest rate scenarios?

Fundamentally if we examine earnings for March 2020 quarter, we can see many companies rolling out their losses in the books so we can see market consolidation between these levels only. We believe that global liquidity will drive the markets. Expect Nifty-50 companies to continue to dominate trading and investments for the next few quarters or until we see a clear end of the pandemic. We believe the fundamentals of many companies will change in this pandemic and hence investors should avoid any particular sectors or themes as on now.

What factors will guide the markets and what sectors will be in focus in June?

Markets will continue to be driven by value buying rather than any sector-specific buying. We will continue to see institutions buying stocks, which will offer good beta in these markets. Coming to specific sectors, we see some rays of hope emerging in auto ancillary, NBFC and PSU banks. We continue to see opportunities in pharmaceuticals and agrochemical sector. We will see stock-specific upside rally in these sectors for the short-term. Select FMCG stocks will also so be good for investments for the coming days.

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