Nifty to hit 4,750 in August: Ashwani Gujral

Tech Analyst, Ashwani Gujral recommends going short in commodities and long in stocks. He sees the Nifty going to  4,700-4,750 in August. He added taht the pullback in the market has not cooled.

Excerpts from CNBC-TV18's exclusive interview with Ashwani Gujral:

Q: What do you think is the pullback, which seem to fizzle out two-days back reasserting itself and how would you trade right now?
 
A: The pullback never fizzled out it actually got support at the 50% retracement from 3,800 to 4,550, 4,150-4,200 was the zone from where it had to restart. That process seems to be happening I think the trade here is short commodity, long stocks and that needs to play out. I think you could get 4,700-4,800 type of levels before this market again starts a trending move.

You can call it consolidation, pullback whatever, it will be jerky it will be a slow upmove but as I was saying last time that both in terms of price and time, the targets still need to be achieved. That credit policy was sort of a washout kind of day and on a washout day when a market tends to hold up then it’s a good sign and possibly means that the market will be able to move higher beyond that knee-jerk. 
 
Q: A couple of chart checks from the infrastructure space Punj Lloyd and Tata Power both looked good yesterday?
 
A: Punj Lloyd has been looking good and probably decline in commodities would take it higher. The support is around Rs 241 it can head back upto Rs 330. 
 
Tata Power that’s still in a bit of a range Rs 900-1,200 it will make significant moves once it can cross Rs 1,200. A very key point is that in this pullback in case metal prices come down worldwide, capital goods will tend to perform much better than the other interest rate sensitives, so people probably need to have an eye on those stocks.

Q: Two more stocks for you from yesterday Tata Communications and Indiabulls Finance?
 
A: All of these financial stocks are making some sort of an intermediate bottom. Indiabulls Finance has got support around Rs 250, resistance now at Rs 341 and then Rs 378. Indiabulls Financial services, I would probably avoid for the moment and look at some of the large banks something like State Bank of India (SBI) or probably HDFC Bank on declines.   
 
Tata Communications has being forming a bottom for much longer than the market has been declining, so probably out here we have a support at Rs 400, we could trade it back upto Rs 550 in case this pullback sort of goes further.   

Q: What do you do with the private banks right now? The ones like Axis Bank, Yes Bank, Development Credit Bank (DCB) how would you trade them?

A: All of these banks are going to have a pretty sharp pullback because they declined quite a bit but they are finding support at lower levels that’s probably the good news.

For Axis Bank, Rs 600 seems to be a good support you can trade it back upto Rs 800. People have to realise that nothing right now looks like a very heavy margin of safety kind of a bet but everything has trading moves, which are possible. Yes Bank, has support around Rs 115 can trade it back to Rs 160, so one can take those trading moves 10-15% and then probably get out around 4,650-4,700 kind of levels. 

Q: Some chart checks on underperforming stocks like MTNL, ACC what do you see on the charts there? They also gave you a bit of a pop yesterday?

A: MTNL has been quite a dog of a stock and did nothing, probably was forming some sort of a bottom. Now that the government seems to be talking reforms so anything with a public sector sort of a character seems to be moving up. Somebody who probably got in around Rs 90 can trade it upto Rs 116 to about Rs 125 but I don’t think it is going too much further than that.

For ACC Cement there has been lot’s of bad news that’s typically the kind of news flow that you want when bottoms are getting formed. Nothing exciting as but they have stopped going down. So ACC probably if you can find support around Rs 525-530 once the uptrend starts, the first target here could be around Rs 700-710 but that’s a while away these stocks still need to form a lot of basing formation before they can get out.

Q: Can you still initiate a long and try and play it up by 200-300 points Nifty or you would wait for cracks to do that?

A: I would buy into this sort of a decline. One has 100-150 kind of downside, probably 300-350 points on the upside. I think clear risk reward is in one’s favour. 

Q: Your thoughts on frontline technology stocks because they just gone quiet now?

A: They had their fall and since the market is not falling as much they will not fall. But I do not think that in any pullback rally they are now likely to outperform. So broadly everything starts moving in 10% kind of a band. So I do not think technology would outperform from here. 

Q: How is IDFCs chart looking like at Rs 88-89 that’s seems to have weakened considerably as a stock?
 
A: IDFC at Rs 88-89 is standing right at a support in case this level goes, then you probably are looking at levels of about Rs 60 so this is a sort of a level from where it has bounced back a number of times. On the upside it really needs to cross Rs 115-117 to gain some more strength.

Disclosure:

I have no positions in individual stocks but have delta neutral positions in Nifty.