Nifty may take a brief pause near 18,000 and a profit-booking may drag the index 200-300 points lower which could be a good opportunity to enter the market, said Vinit Bolinjkar, Head of Research, Ventura Securities in an interview with ET Now.
"I believe that at 18,000 level, we might pause a bit because 18,000 is a psychological level and we have seen a non-stop rally from 15,300. So I think, there would be a breather, there could be some profit taking and within that pullback, which could be about 200-300 Nifty points one can start entering the market, though the midcap and the smallcap space will continue to rally going ahead," said Bolinjkar.
Bolinjkar believes financials will continue to do well while the hotels and hospitality industry also looks to be in a sweet spot. He said that from the next quarter, consumption should come back so retail, FMCG and all these other stocks should start performing.
Within the financials, he pointed out that the PSU stocks have not performed much. "They provide significant value at current valuations and so we expect them to outperform the entire pack of banks," he said.
Among the stocks, he is bullish on Bank of Baroda and Canara Bank from the financial space. From the hospitality space, he likes Indian Hotels, Lemon Tree and Mahindra Holidays. Among smallcaps, he likes Royal Orchid.
The IT sector, which has been underperforming for the last few months, may surprise investors in the current quarter as wage costs will ease and the rupee's weakness will be a tailwind, said Bolinjkar.
"The underperformance (of IT players) was largely due to the wage bill as attrition rates were very high. Now with the international recession ploughing around, some kind of sanity is prevailing within the startups and job-hopping scene. All the tech heavyweights have guided towards slowing down on hiring. I believe the wage cost will settle down and we will see the rupee benefit ploughed back in and they would surprise investors on the upside this quarter," said Bolinjkar.
"I believe that IT stocks could prove to be more defensive than the Street expects them to be," he added.
Bolinjkar does not expect foreign investors to slow down their buying in the Indian market since they have sold aggressively since October 2021. However, in case of a sharp jump in crude oil prices, the rupee can come under strong pressure.
He said one should "align banking, IT to a certain extent and export-oriented stocks to the portfolio to take advantage of any attacks on the macroeconomic front."
Disclaimer: This article is based on an ET Now interview published by economictimes.com. The views are those of the analyst and not of MintGenie.