3 Top Sectors & A Dark Horse: Manav Chopra's Stock Market Analysis Is Worth A Watch

[00:00:00] Speaker 1: Manav, welcome to the show. Six days into this, has the setup emerged? [00:00:04] Speaker 2: Yes, I would say the larger picture for the market is still bullish. And you know, after every bull market, there is always a transition which happens historically for six to seven quarters. This is nothing new. You know, it was only 2011-13 where the transition after a bull market went into a larger repair phase. Post that, Neeraj, if we see last 15 years history, a bull market, a six, seven quarters of transition, and the bull market resumes. Obviously, the cycles are different. This time, you know, I would say we have seen stronger bull market coming all the way from 2020, then a transition 2020 to 2024, again a bull market, then right now we are in the seventh quarter. So my case is that, you know, more or less the worst of 2026 is behind us. We have already formed a very strong low in the month of April. What we are witnessing now and which I, you know, anticipated at least looking at the market internals is that, you know, after forming a low market, tries to form a higher base. That is what we are seeing. And the leadership which was missing in BFSI has actually stepped in. There were some very strong inter-market positive factors which were moving for us, mainly because of, you know, what we've seen on the global market. The crude more or less is stopping out. And now, you know, we've got that de-escalation where the crude has started to break down. It sustained below, you know, $95 for a reasonable amount of time. Despite a lot of inflection, the rupee has more or less topped out. I think the hidden inside all this was the inflection zone of India 10-year yields. You know, the India 10-year yields have been in a downward trend and recently kind of topped out closer to 7 and now started to come back below. I think all these are kind of moving factors. And with this de-escalation, I think this will just propel the markets. So markets are trying to form higher bases. The shorts in the markets are much higher than the March lows. So it's a very strong bottoms-up market. And now we've already witnessed a short-term breakout in Bank Nifty. But my case is, any bull market that has to emerge, unlikely it will happen without any support from the broader breadth of the markets. And we've got that validation already. You know, in the month of April, May, the kind of rally we've seen in the small caps and the broader markets, the breadth is way stronger. And these are very clear signals. So a stronger breadth into the markets. The heavyweight sector is forming a higher bottoms. So these are very strong signals for a bull market emerge. Obviously, our case still remains the broader market would do far better because Nifty has its own challenges. But yes, we are in a very strong bottoms-up market. And the worst is behind us simplifying it. And we definitely surge higher. [00:02:48] Speaker 3: Manav, first of all, good morning. What are you saying? So you're saying BFSI is the fulcrum on which this is going to move, right? Because ultimately, we're talking about the fact that foreign institutions have sold. It's been concentrated in this pocket. If you're saying that the rates are not necessarily going to go up as much as anticipated if this conflict is over, that is a positive. This entire move from the Reserve Bank of India to get them relatively cheaper deposits, that's also positive. So several tailwinds coming through at once. [00:03:20] Speaker 2: Yes, and in fact, what you said, you know, the FI selling is something we cannot ignore. Yeah. But let's also go back a bit in time. You know, the private bank to Nifty, outperformance actually topped out in the year 2021. FIs have been selling private banks since last three and a half, four years. It's my early anticipation that at least sell-off in private banks is more or less at the end stage or is more or less finished. If you look at Nifty to Bank Nifty ratio, right, they have started to turn positive and see a breakout after four and a half years, which we cannot ignore. So the underperformance of private banks or the BFSI in general, see, BFSI has become a very big pack altogether, you know, 38% of the Nifty. So until and unless a BFSI doesn't step up, we don't expect a sustained move to happen. So my case is that at least private bank, the worst is behind, and, you know, that will set up a very strong stage. And obviously with these macro intermarket factors on the technical terms, which works for us, will definitely provide a better stage going forward. So my case is that at least BFSI from here should provide that market leadership. Private banks will be a surprise. In fact, if we go a little lower, the mid-private banks and the smaller private banks are in a very strong mid-stage of a bull market. If you go to see, it's only the private banks because of FIs selling. Otherwise, they are already into mid-stage. Look at the stocks like Bandhan Bank or the RBL Bank or the Fed Bank. They are in a very different space altogether. And this cannot be ignored. The breadth of a lot of financials are quite positive. [00:04:46] Speaker 1: Sorry, just before Hilal takes the question, are they better versus the HDFC, Skotax, ICICI? [00:04:51] Speaker 2: Absolutely. If we have to beat the markets, we have to focus on the next 50. Today, the next 50 has given a breakout after five quarters, you know, sorry, five months breakout today. So when a next 50 is forming a very strong construct, which is a part of your top 200, that's a very classical way. And my strong case would be the mid-private banks, the smaller private banks, is the space. Obviously, some support coming from large caps is what you eventually need for the market. But yes, the bigger alpha would be in the broader markets. [00:05:22] Speaker 4: What about the CV cycle players? Because you're seeing some momentum today as well. NBFC side, CV financers, or for that matter, your gold financers. You know, what is the setup looking like there? [00:05:35] Speaker 2: Okay, so if we speak about the NBFC part of it, yes, there are a few names which are reasonably set up. But my case is they're going to be more or less neutral. You know, the short squeeze come in, maybe a 10-15% rally, it might again give away. But, you know, the theme within the autos, if you want to play the autos, I think the tires would be a very, very interesting theme. You know, there are a few stocks which are down 20-25% from its recent all-time highs. Largerly, you know, reasonable higher bull market structures. I think the small caps for the tires are very, very strong. They have already witnessed that raw material pressure because of the crude. But my sense is, you know, the upcycle for the next 6-12 months will belong to these tire names and auto banks. So, the NBFCs would be more like a trading, but I think the focus should remain on being into the trend which still persists and where the raw material or any issues, at least on that front, is done. [00:06:28] Speaker 1: So, mid-sized banks, tire. [00:06:30] Speaker 2: Yes. Whatever. The other segment that we also like is the infra-CAPEX. You know, I've been quite bullish on the infra-CAPEX theme. It's been two months now. Obviously, the market has rewarded us timely. Adani as a group, I think the structure still remains there, particularly within the large caps. Obviously, Larson. But if I step down a bit, you know, there are a lot of power stocks in the small and the mid-cap space which are more or less have started to witness its long sideways, you know, five, six years of consolidation and is stepping up well. Shipping stocks, you know, there are a lot of shipping stocks which are still under-owned. My sense is under-owned where the domestic holding is anywhere between 2-5%. And, you know, there is a reasonable amount of scope on the upside. By shipping, you mean, just an example, the shipping cooperation of India types? Yes. The shipping cooperation or some other... Or the shipbuilders. Yeah, shipbuilders or, you know, the defense. So, this is a theme which could, in the infra-CAPEX, could be the next leg up where the under-ownership is there and, you know, we could see more flair coming on the upside. Oh, sorry, clarity. [00:07:29] Speaker 1: So, SCIG shipping types or the shipyard companies, the shipbuilders? [00:07:33] Speaker 2: The shipyards, companies and the SCI... The entire basket, basically. [00:07:38] Speaker 1: Okay. Okay. [00:07:39] Speaker 2: Okay. [00:07:40] Speaker 1: Manap, just very quickly, 30 seconds. Is there a dark horse? 30 seconds. [00:07:44] Speaker 2: Yes, for me, I think the dark horse would be only your broader markets, right? I'm still very, very confident that, you know, if we are looking at the small cap to nifty ratio, you know, a lot of people are confused that we've already seen a very big rally coming from 2020 and they are confused, you know, or kitna chale ga. My strong case is that, in fact, we are seeing a ratio breakout after five years. The next journey will belong to the smaller, small caps and it's going to be more stock pickers and if we look at the micro cap 250 index, which is still very strong, so my focus would be more on the small cap themes. The larger sectors would just be your navigator for your validations. [00:08:27] Speaker 1: Is that the chart, Manap? Is that the chart you're talking about? [00:08:30] Speaker 2: Yes, this is one of the charts that I had highlighted early where, you know, we anticipated this higher bottom formations happening into the markets where, you know, your mid cap 100 and small caps are ready to see a good surge. So, you know, this was one of our scenarios which we highlighted just a couple of days back. [00:08:48] Speaker 3: So, take us through the talk. Okay, so this is another one. [00:08:50] Speaker 2: Yes, so this is one of the charts, you know, which is on your nifty 500 to your nifty ratios. You want to walk there? Alex, you want to? [00:08:59] Speaker 1: Okay. Let's just try and please explain this properly so that our viewers understand this. [00:09:03] Speaker 2: So, one thing is very important. Yes, please. I'll come here. Yeah, sure. Please tell us. No bull market starts until unless we see a broader market to really set up well. Okay. So, for me, you know, a lot of people think about nifty 50 as one of the key leaders. For me, it's always nifty 500. So, the fact that the nifty 500 actually outperformed nifty 50 by roughly 14%. And this is one of the companies where I was talking, if the market forms a bottom, you see a flag. It's like a flag like a healthy consolidation. It was not a distribution. It was basically, you know, market churn, market digesting gains. And so, this is a very strong conviction. My case is that this consolidation breakout eventually takes markets to the next leg higher. A similar formation was seen in 2011-13. And from there, market rallied 20 to 30% in 12 to 15 months. [00:09:50] Speaker 1: Wow. But you're saying Smits will be a rally. So, the previous chart as well. [00:09:53] Speaker 2: The previous chart? Okay. [00:09:54] Speaker 1: Is there something relevant here, Manav, that you want to quickly point out? [00:09:57] Speaker 2: Yes. So, not so much of relevance. But what we are trying to say is that any setup of a bull market, which always setups, you know, 50-day average usually on the index level is a very key important scenario for me to judge. You know, whether are we seeing some leadership stepping up or it's just one bump up and then we give away again. So, despite of Nifty coming off from 24-200 in the previous time and came all to 23-300, see exactly what the markets have done. You know, you've seen mid-caps actually being above this level. Your small caps being above 50-day average. But even your Nifty 500 sustained. But your Nifty 50 was rightly here. So, it was the broader market. Which have done well. Which has done well. Like one of the leadership in any bull market, you need breadth. [00:10:39] Speaker 1: Bread. Okay. Alex, Edaal, any question? [00:10:41] Speaker 4: I think there's one more chart that, you know, Manav already has. I think we should explain that one as well, Prakran. [00:10:47] Speaker 1: Can we get the next one? Okay. So, Prakran is our executive producer. Can we ask our PCR to bring up the next chart? No, Prakran is inside, so he's coordinating that one for us. Okay. Maybe we'll have one more chart here. But, Manav, so, in effect, what you're saying is, let's maybe wait 10 seconds for the chart to come, that the Smits will lead the rally. Absolutely. And you've given us some of your favorites. And you said that Dark Horse is the broader end of the spectrum. Absolutely. [00:11:08] Speaker 2: And the broader market, we have to have a strong thesis for a buy on dips. Great. We are not in a market where you just take out 20%, 30% and then you take it off. Got it. My sense is we should ride till at least next 12, 15 months. Got it. And we're getting strong validations already into the system. [00:11:23] Speaker 1: Great. That's good news. Manav, thank you so much for joining in.