Oct 19, 2017 08:12 PM IST | Source: CNBC-TV18 Moneycontrol.com
Wealth creating opportunity! Metal sector to outperform, see 30-40% upside in 1 year: Atul Suri
Suri is very bullish on markets for the next 3-4 years. He sees tremendous opportunity in the metals sector. The sector rose 44 percent so far in the Samvat 2073.
The Nifty50 rose 18 percent so far in the Samvat 2073 but there is plenty of upsides left in the market, says Atul Suri, Chief Investment Officer at Marathon Trends PMS, who sees the index touching 11400 by Samvat 2075.
Although, he sees near-term pain if Nifty Bank underperforms which could lead to some consolidation in the market. The crucial support for the index stands at 9700 and a breach of which could take Nifty towards 9200 levels.
But, Suri is very bullish on markets for the next 3-4 years. He sees tremendous opportunity in the metals sector. The sector rose 44 percent so far in the Samvat 2073.
“If we look at the underlying commodities charts such as copper or zinc they are outstanding. The chart patterns developing on these charts suggest bullish bias because most of them are breaking out,” said Suri.
“Our own metal index saw double bottom formation. I think going forward we could see 30-40% move in the next one year in metals. Fortunately, numbers of players in the index are few and there is under ownership,” he said.
He further added that none of the analysts talk about metals. "How many mutual funds have their top five holding in this sector? Hardly any," he said, adding that hence, going ahead, metals are likely to continue to enjoy leadership status.
Below are the excerpts of the interview.
Latha: It has been a great year Samvat 2073. On a broad brush how does Samvat 2074 look, the next 12 months?
Suri: I have a call of 17000 on Nifty which is about a 70 percent move for the next four years but all four years can't be the same. Next year, people are very buoyant and bullish but we could have a bit of a measured index move, I would think about as 12-14 percent kind of index target and that is still not very bad.
My only issue is that, right now we are almost in a slumber bird mode in terms of volatility. The global VIX, the US VIX is at a 20 year low, so essentially markets are just enjoying this slumber kind of phase. My fear is that you will get back into moments of volatility, that I think is going to be the pain point, though I do think that we will have about 12-14 percent kind of index year which sets a target of around 11400 or thereabouts on the Nifty. It will be more stock specific rather than pure sector driven thing. There are one or two sectoral bets which I feel bullish about but it is going to be more stock specific.
Post Diwali last year, barring two months of demonetisation, after that we have had 10 months which were like cruise control on a highway in US, it has been so smooth. I feel that we will see a little more volatility, we will see a little more stock specific sort of movements. It will be good but I think the last 10 months were bit of a dream.
Anuj: The sector that stood out was commodities and resources, you could include metals, Reliance, do you see this run continuing?
Suri: If you ask me the sector that will outperform, it is metals. My reason are that if you look at the underlying global commodity charts, copper, zinc, aluminium, you will find that they are outstanding charts. This is reflected not just in charts but even in global metal companies, mining companies, you will see that kind of chart patterns that have developed. All have had huge inverted head and shoulder patterns and they are just kind of breaking out.
A similar pattern is seen if you look at our own metal index, we have had a kind of a double bottom formation. So, we could see a 30-40 percent kind of move in the next one year in metals. Fortunately the number of players are few and more so there is under ownership. It has been the best performing sector but nobody talks of metals, all are talking about financials. How many mutual fund or PMS portfolios top 5 holdings are metals? I think there will be hardly any. So, the best performing sector and nobody talks about it, nobody owns and you have a global commodity rally, I feel that going ahead for the next 12 months or so metals could continue to be in leadership status.