Market in consolidation mode; avoid sugar stocks; top bet a bank: Aditya Arora

Aditya Arora, Adlytick, says his top recommendation is from the banking space. Kotak Bank has been a laggard and underperformer for a long time. It is taking the lead in the new rally and it is doing pretty well. Patterns are bullish. Kotak Bank is a buy at Rs 1830; Rs 1790 is the stop loss and target is Rs 1880-1920.

Let us begin by discussing the sugar sector itself because that is what is making a lot of news flow today. So, from the bottom of the day, we have seen a bit of recovery. What should one believe? Stay away or buy the dips?
This sector is facing a lot of headwinds. Even if you look at the international market, sugar as a commodity has corrected very steeply in the last two to three days on the back of the news that Brazil is increasing production and supply because of excessive demand. So, now when the market is being met by excessive supply, it does not make sense for the prices to actually put up in the near term. There are a lot of tailwinds on the upside.

One should avoid this sector for the short term because I do not think there would be a significant rise in the short term. Prices may consolidate and they could rebound from a trading range but those would not outperform the market wherein other sectors and stocks are actually doing well against the indices.


Let us talk about the market itself. Looks like 21,000 is a bit of a hurdle on today's weekly options expiry as well. What is the trade that you would suggest or recommend at index level right now?
We had a parabolic rise from 18,800 to almost 21,000 in a very short period of time. Whenever such parabolic moves have happened, markets have corrected a little bit or we have seen little profit booking before the next leg of the rally actually starts. On the contrary, data is pretty bullish on the derivatives front. Hence, the market is pretty sideways or in consolidation mode.

I would wait for the next leg of the rally to start to take a bullish bet. Otherwise, one can take call writing positions at the higher levels like 20,100, 20,500 because I see markets being little sideways before we take the next leg of rally at the higher levels.

What are your top recommendations right now or top picks?
My top recommendation is from the banking space. Kotak Bank has been a laggard and underperformer for a long time. It is taking the lead in the new rally and it is doing pretty well. Patterns are bullish. Kotak Bank is a buy at Rs 1830; Rs 1790 is the stop loss and target is Rs 1880-1920.