Continue to trade long-term on Nifty: Rajat Bose

Excerpts from CNBC-TV18's exclusive interview with Rajat Bose:

Q: What is the call on the Nifty this morning given yesterday’s volatility and the way we closed up?

A: In a sense I think the talk of the earlier lows being retested are bit too premature because the kind of recovery that we have seen yesterday suggests that-actually we might have seen a short-term reversal yesterday and that would be confirmed when the Nifty trades above 5,025-5,030 range. Once it crosses 5,096 I think this talk of testing fresh lows or old lows would evaporate.

As of now if you look at yesterday’s trading activities certain things are very clearly noticeable; among the largecap stocks and the active stocks universe you will find that most of the stocks have closed near the day’s high or close to the day’s high and some of them in candlestick parlance either piercing line which is also a bullish formation, or hammer line or a bullish engulfing pattern.

These things actually tend to suggest that after downswings that continue for 6-7 trading sessions and if you get picture of this kind with open interest addition that signals a short-term reversal. Of course we need a confirmation and that confirmation is most likely going to come today. I am not negative at all, I give a buy call on yesterday’s closing strategy and I would continue to play on the long side in Nifty unless it falls below 4,950 Nifty spot.

Q: What is happening with the real estate stocks on your charts?

A: Real estate stocks are still showing weakness; in fact we need to see whether DLF manages to cross the crucial level around Rs 643-644. If it were to do so then you will see some good movement happening in DLF.

For instance Unitech needs to cross Rs 289-291 range. Only if it does so with good volumes then you will see it going up beyond Rs 300 levels.

Indiabulls Real Estate clearly showed weakness yesterday. Overall this particular pack is not showing the kind of strength that maybe other sectors have already started showing in yesterday’s rally, so this time it could act as a laggard but generally you have seen those big moves tend to happen on the second-third day of an upswing in real estate stocks and so let us watch out that space for today.

Q: Two stocks for you, Cairn that has now moved 50% in a month and a half and HOEC?

A: Cairn was yesterday’s star, it has moved pretty strongly and even yesterday it performed brilliantly but today it needs to stay above Rs 298 while the short-term technical target still remains at Rs 320 but you need to see whether Cairn stays above Rs 298. In case of any profit booking if it were to fall below that then you might see it even coming down to something like Rs 289-284. But I do not think it is going to fall below Rs 284 in case of any profit booking. On the other hand possibility is that if it were to stay above Rs 298 it might actually hit that Rs 320 target.

HOEC has completed its short-term correction and it is trying to move up. It maybe the second best star in the upstream oil companies’ space. HOEC from here may move up but its chart pattern is not showing as much strength as Cairn. So we need to see whether HOEC really carries this momentum. For that to happen, you need to see HOEC moving above Rs 149. If it were to do so then Rs 157-163 would be the next target.