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Stay positive on Nifty; RIL, HUL to lead next week: Narayan

There is no reason to worry about the recent market fall, says CK Narayan of Growth Avenues. He says the market has only fallen for three sessions while it rose for 10 in the recent past.

“No one likes when the market drops especially not when it drops with some nasty surprises like it did a couple of days ago and continued on that a little more,” he says, adding that one should continue to remain sanguine about the market.

Furthermore, he expects the market to be led by  Reliance Industries post its stellar Q4 results and Hindustan Unilever .

Below is the transcript of CK Narayan’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.

Latha: We didn’t expect to see 8600 when we started this week. First up, on Monday, do you think that it would be advisable to start with short trades or at least be prepared for more sells and shorts? How does the week look?

Narayan: I think what we should look at is the whole thing in a bit of a perspective. The market had gone up for about 10 sessions and it has now dropped for about three. So, that is not anything out of ordinary. No one likes it when the market drops especially not when it drops with some nasty surprises like it did a couple of days ago and continued on that a little more.

However, I think the three day fall has done nothing much. When you reach down into 8600 levels on the futures or probably even tap down a little lower, say 8550, I don’t think it damages the trend in any manner. I remain completely sanguine about the state of the market. It remains resolutely bullish. Periodic interruptions by way of reactions are quite normal and for some reason or other will show up whether it is global or it is local.

For the coming week, the market would take some read from Reliance Industries for which, as I read, the figures seem to have topped whatever expectations were there. The consensus for standalone was somewhere around Rs 5800 to Rs 6000 and Reliance seems to have topped that pretty handsomely. So, I would look for Reliance to kind of pull the market up.

You had Hindustan Unilever (HUL) during this week being very firm. I would look for HUL to pull the markets up. I think lately we have seen some of the PSU banks trying to stage a bit of a rally. Pharma has taken a fairly decent beating. Most of them are coming down into support zones. IT maybe a little bit iffy because of the earnings. I think the large batsman or a heavy hitting batsman of the markets is quite poised to the market up rather than down. So, I would remain quite bullishly poised and would look for any dip in the early part of the week as a buying opportunity.

Sonia: You spoke about Reliance that may pull the markets up because of the good set of numbers but in the near term, say in the next one month or so, how is the chart of Reliance looking? What could the level be to which Reliance could rise?

Narayan: It is about time that we started looking at Reliance Industries with some new eyes. We are used to seeing it remain down for years together now. The way it has come back in a pretty roaring fashion from the recent bottom at about Rs 800; set up all sorts of reversal patterns at the bottom whether they be on candlesticks, whether they be on Elliott wave structures or whether they be on oscillators structures. These are all technical parameters which we are quite positive for Reliance.

It has sort of risen up to the level of the last recent swing at about Rs 950. So, that was a kind of a natural resistance. I think it will be exceeded and we should be very shortly seeing the four digit levels being chalked up on Reliance. About Rs 1015 is the minimum that I would expect this rise to go to. If the market trends were to pick up, we should be looking for substantially higher levels in Reliance. I would expect it to take the leader’s baton from hereon.

Latha: I have three stocks for you. If you can tell us whether they are sell on highs, sells anyway or buy on dips – Lupin ,  IndusInd Bank and Bharat Forge .

Narayan: I think Lupin and Bharat Forge came in for a bit of a stick because of some brokerage downgrades. We have seen them taking the brunt of the selling maybe over the last couple of days. In the case of Lupin and Bharat Forge, this is the first leg of the decline. I don’t think they will promptly get up and start running and create new highs. What you should expect there would be some sort of a rally to the recent decline and for some consolidation to happen before they start rising into new highs.

However, I don’t believe they should be seeing any significant lower levels from where they are at. At about Rs 1700-1750, Lupin is a great buy particularly for those who are longer-term oriented. Around somewhere about Rs 1170-1195 levels, I would be a buyer as well in Bharat Forge. IndusInd Bank has great set of numbers. My sense is that in this market whatever company comes out with a good set of numbers will automatically become a buy.

I heard you asked this question to the earlier guest. You asked whether good numbers qualify as a buy in this market. My answer to that is most emphatically yes because we are in a market where people just need a reason to buy. So, they maybe a little scared about the levels and periodically take some money off, but if you give them a reason to buy they are going to come in to buy as soon as there is a dip.

IndusInd Bank  took a bit of a stick. It is dropping down again into some sort of supports. Wherever it meets the support and reverses, you should look to buy it. Any stock which comes out with good results automatically qualifies for a buy, maybe not on the same day, but as soon as has a reaction you should buy it.

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