In the short-term, 8130-8140 could be a resistance, says Anu Jain, IIFL Private Wealth Management. However, it can go down to 8050-8060 during expiry, she adds.
She says: “As long as you are holding that 8050, the more time you are spending over it the stronger is the Nifty’s overall move going to be.”
According to her, a decent stop loss would be 7920-7930 because till it does not break that level, it will be a trading range of probably 150-200 points. Market is seeing a sector rotation, so once an investor is in the right stock, he or she should just stay invested, she says.
As a sector, cement is giving very clear signals that it is not going to stop moving higher, says Jain. She believes there is a positive bias on pharma also. Another sector which is showing accumulation, but which has not yet given a breakout is PSU banks, she adds.
Over the next 2-3 weeks, she believes Maruti Suzuki can rise another 4-5 percent.
Below is the verbatim transcript of Anu Jain’s interview with CNBC-TV18’s Anuj Singhal and Sonia Shenoy
Anuj: What is your call for the Nifty in the near term, do you think all time high is almost a certainty now and the big question, can that sustain or would you expect a decent correction from here on?
A: The way we have been moving it looks like it is going to sustain. I mean the fact that because of the external events which were happening we did correct right up to that 7920-7930. And the pullback on Thursday was very surprising. It was a technical pullback because 8015 on the futures meant that anybody who had written the 8000 call and which we had seen a lot of that happen on Wednesday, had to cover up. So that had its impact and it brought the market to that 8130-8140.
Now you are in the interim on the short-term basis at a resistance which is 8130-8140, which the Friday’s closing was showing that you try to breakout, you couldn’t breakout.
Now I would say that if you can hold this for a couple of days and I don’t want to really keep the expiry as a view point to take a Nifty view because you could even close down at about 8050-8060 for expiry. But as long as you are holding that 8050, the more time you are spending over it the stronger is the Nifty’s overall move going to become.
I think for someone who is looking now for a decent stop loss, the decent stop loss should be between 7920-7930 because till it is not breaking that it will become a trading range probably of 150-200 points. For a breakout obviously we are looking at 8180 to take off, but the more time it is spending and if you are looking at the sector breakouts whether it is pharma, IT, it looks more and more that you are moving towards the October expiry to be a higher expiry close.
Sonia: So if we do see this market moving up higher, what are the stocks that could actually lead it there especially in the next week. So what are the stocks that you would be long on?
A: As a sector, cement is giving very clear signals that it is not going to stop. So obviously there has been a momentum build-up which has already happened for certain percentage points. So we saw JK Cement , we saw India Cement , so corporate governance is now out of the window, it is just momentum. So I think that is definitely going to continue. So if somebody wants to take a trading position or an investment position it is just the type of stocks you get in for that. So that is definitely going to be a positive bias.
So I was looking at charts of JK Lakshmi , JK Cement, Ultratech Cement , India Cement . Some of the smaller ones even though JK Cement moved up quite substantially, it is looking good for even about another 10-12 percent more; same with India Cement and Orissa Cement. So the small caps which are not so liquid, probably the larger caps could give you 3-5 percent in the week. So that is a positive bias.
Obviously there is a positive bias on pharma also. Dr Reddys Laboratories which is in the large cap is looking like it could probably give you another 4-5 percent. So that stays on the long side.
Another sector which is showing accumulation, but which has not yet given a breakout is PSU banks. There is a certain amount of bottom formation which has happened in this period. One can see whether it is smaller names like UCO Bank or larger names like State Bank of India . Some kind of action is starting to happen but it won’t happen in the next week. I probably expect it in the October series to see some kind of breakout there.
Anuj: In terms of the big weekly losers, big monthly losers, stocks like Jindal Steel and Power Limited (JSPL) stand out. How would you approach these names at current levels, also Jaiprakash Associates?
A: JP Associates obviously, we all know it is more of what is happening on the ground and can fall down because people are actually not expecting it to revive anywhere. So you will not find buyers in that anywhere. It would be a very risky proposition.
As per JSPL , I think would wait another week or 10 days because that whole field is going into a period of consolidation. Would probably look at it after expiry at what levels it settles in before I make a call whether it has to be bought or not. But no hurry to get into the counter.
Sonia: Would you buy any technology stocks next week?
A: Well technology everything is breaking out – whether it is Tata Consultancy Services (TCS) which is giving a signal for about Rs 2900, a Tech Mahindra for Rs 2800, Persistent Systems for Rs 1600. Right now, it is momentum driven and they are all breaking out, so I would probably look at any of these if somebody wants to take a short-term call. But even Mindtree which has closed at around Rs 1220 can go upto about Rs 1300.
So yes there is a very strong positive bias on all of those counters, including Infosys which closed flat but which is showing upward trajectory of about 5 percent. So can trade into any of those counters, I think the midcaps will definitely outperform the large caps even there. I would have a bias for Persistent.
Anuj: Arvind, Ashok Leyland and Voltas, they have corrected quite a bit on Friday but have been rerated this year. Would you pick any of these stocks and what is your call on these three names?
A: The top would be Arvind, it has moved up substantially from Rs 200 to about Rs 340. From Rs 340, a correction to about Rs 310 levels is a very logical correction. I think anywhere close to Rs 300 it would become a buy again so would look at it as a buy, Voltas also.
Infact all three of them are good but my category level would be first would be Arvind , second Voltas and third would be Ashok Leyland . On dips all three continue to be strong buys.
Sonia: If you had to pick up two-three other stocks to trade next week what would they be?
A: Maruti Suzuki is looking good because of the yen factor because it has broken out today so I would place my bets on Maruti moving up very sharply. So there is a chance of another 4-5 percent coming over the next two-three weeks. So that would be a top pick out there. So in the market there is more of a sector rotation happening, so once you are in the right stocks, one should just stay into it. It is more a question of not doubting the market and staying contented, which is for all things in life. So there is a lot more to come.