Nifty may break 3850 levels: Ashwani Gujral

Q: What is happening with some of these technology stocks, Infosys and Satyam?

A: Last time around I had mentioned that if the next downdraft starts, probably technology stocks would lead it and that is how it is playing out. Now that Satyam has broken below Rs 425, it could be now headed towards Rs 360. Infosys may go below Rs 1,536 even Rs 1,400 is a possibility.

For crude, we try to play Hindustan Petroleum Corporate Ltd (HPCL), Bharat Petroleum Corporate Ltd (BPCL) for the US financial sector, this is a good proxy. So, probably there is more downside in this sector than a lot of other sectors. We might see more downside coming into technology stocks.

Q: Just to get back to yesterday’s market two stocks Ranbaxy and IFCI, what’s your view on these stocks?

A: Ranbaxy is going to get into trouble now because it had a very good rally and this news flow would probably take it back towards Rs 425-430. It has got resistance now at Rs 500; the uptrend that was in is probably over.

IFCI remains in a big downtrend. We will get those relief rallies whenever news flow is positive but Rs 30 is now a support, which if broken it can go lower. Rs 42-43 is the resistance. All of these momentum stocks are likely to see levels from where they literally started moving, so people just need to exit out of IFCI, if they are stuck at higher levels.

Q: The SGX Nifty is actually trading 3% below the 3,950 mark if it does that would you see it as an opportunity to play for a bit of pull back this morning?

A: You shouldn’t be very aggressive in trying to trade long in this market but obviously if towards the afternoon, you see that Europe is not falling much and Asian markets are coming back then that becomes a good 1,800 points kind of trade. Right now, buying is a very sensible idea because levels are finally breaking. So, unless we have enough evidence that it is coming back, you need to be going long right now, you could look at covering some shorts.

Q: What is your top trading call today on the midcap front?

A: We would look at shorting some of the largecap technology stocks and even on the midcap side, you would look at going short rather than going long. Only places where you could go long is some of the metal stocks like Sterlite or Nalco but broadly one should stay away from being long in anything right now.

Q: If you were running a short yesterday and you got 100 points this morning, would you take some or is it prudent to keep them on?

A: I would take them because still we cannot see any clear indication that 3,850 is going to get broken today. You may get one more move, which goes right up to 4,000 and then gives up. So, we are still in a range and till we go with that assumption you need to take profits each time Nifty futures gets to about 3,900 or just below that.

Q: How do you approach these two stocks in the largecap space, Sail at Rs 135 and Bharti at Rs 700?

A: Sail is showing some support around Rs 130 because of the metal space but till it crosses Rs 150-155, it is not showing a lot of strength. Broadly the non-ferrous space is showing more strength out here.

Bharti continues to remain in a downtrend the next significant support is around Rs 625-630. The idea now is that the spaces, which did not get hit as much like telecom or technology and to some extent even pharma are going to get hit in case 3,850 gets broken. So, people need to be careful in these sort of defensive spaces because they could come down next.

Q: What are the banks telling you now, HDFC Bank is back to Rs 980, we have seen ICICI Bank go down to Rs 580-560 and even Axis Bank is collapsing after good results? How are those charts looking?

A: Now it is a turn of those blue-chips private banks because they are the ones, which have not taken the hit so far. For HDFC Bank, Rs 1,000 was the key level now it could really go in a hurry towards Rs 850. For ICICI Bank, Rs 550 was a support in case it starts trading below it, Rs 475 should come in. Even for Axis Bank support now comes in at Rs 565, resistance is going up to Rs 700. Again as the financials in US deteriorates, there is a concern in India also. So, that is an offshoot of that development but clearly the safe havens will now get hit. 

Disclosures:

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