Buy The Dip A Fleeting Opportunity In This Market, Says Elara Capital’s Biju Samuel

That has prompted the senior vice president, quantitative and alternate strategy, at the brokerage to be cautious in responding quickly to any bearish signs in the markets. “In a bull market, the trend is innocent till proven guilty. In a bear market, the trend is guilty till proven innocent.”

Often such bearish signs surface but fail to materialise, especially in a bull market that’s not very mature, he said in an interview with BloombergQuint’s Niraj Shah. “Price-wise, we have moved vertically, but time-wise, we’ve only been in a bull market for about 18 months.”

Right now, Samuel said, the market has reached the first layer of being ‘oversold’, a particular threshold where regular, small dips get bought. “We’re still in the mode of a quick dip and quick resumption of the uptrend.”

In a Sept. 3 report, Samuel had said a medium-term target of 19,600 and long-term targets of 24,400 for Nifty are “not unrealistic”.

But right now the markets are nearing the point of “vigorous turnaround”, which means that equities will remain overbought and bounce back sharply from any near-term decline, Samuel said. “So there’s a buying opportunity but it won’t be comfortable for investors, and would rather be a fleeting moment.”

Samuel's key themes include information technology, metals, real estate and banks.

Information Technology

This is the “biggest secular story” of the markets in the last 10 years, Samuel said, citing Bengaluru-based Mphasis Ltd.

“The relative performance of Mphasis to the markets broke what we saw even in the IT mania that peaked in 2000. That was the message to me. Post 2000, we have seen cyclical trends in technology, but no secular leadership of tech,” he said. “It has started with Mphasis now. I wouldn’t be surprised if I see a 5-10 year positive bias on the sector.”

According to him, it’s possible that select IT and fast-moving consumer goods stocks could possibly be overbought and therefore, underperform.

Metals

For the first time since 2006-07, the base metal stocks are breaking levels, Samuel said. “In 2017, it looked promising, but it was deceptive and value destruction happened. But this time around, it could be substantial, and I see further upside on metals and commodity complex as a whole.”

Real Estate

“Real estate, like metals, has been a decadal underperformer, what we call a basement dweller. But it has now showed promise, and with its recent breakout, positive response by realty stocks is likely,” Samuel said. “It’s possibly an optimal time to buy those stocks at dips.”

Banks

Public sector banks, he said, could have sizable upside. The sector, too, has seen a decadal bear market. It’s heavily under-owned and is now launching a secular bull market.

Watch the full interview here: