Take fresh short positions only on rallies now: Rajat Bose

Rajat Bose, rajatkbose.com feels that the market needs to watch for the 4500-4520 levels. Speaking to CNBC-TV18, Bose said that the 4487 level is crucial for the spot Nifty now. He added that at higher levels, one may relieve their current existing positions. The investors should take fresh short positions only on rallies now, he advised.

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

Q: Technically if the market does begin to drift farther away from 4,500, what do you watch for next?

A: At this point in time, I would say that we need to watch out whether or not Nifty manages to cross 4,500-4,520 levels and if it does cross whether it sustains at those levels.

On the other hand, I would be watching for a critical level of 4,478 spot Nifty. If spot Nifty remains below this level you will see weakness coming back once again and in that case 4,445 and 4,428 are the two levels to watch out for before 4,411, which was yesterday’s low, is retested.

I would also say that at higher levels one should actually exit or lighten up the positions in which one has got stuck. Fresh short positions are recommended only on rallies not at current levels because at current levels it is very difficult to take a profitable trade because the volatility could be high on both sides.

Overall situation suggests that some of the pivotals have come close to their significant support levels, so there could be a bounce back but whether that bounce back will happen today or right now is a very difficult question to answer. I would rather wait and watch for the time being and then act accordingly given the cues provided by the Nifty.

Q: What kind of targets are you working with on Cairn now?

A: Yesterday Cairn India showed good movement but I would suggest that one should watch out for today whether it crosses Rs 299-302. If it manages to stay above that then one should be looking at a target of Rs 310 but since crude is finding difficult to cross USD 138/bbl with any degree of major success, I would suggest that some profit booking is warranted for short-term players because between Rs 302 and Rs 310 there could be quite a bit of profit booking even from institutional players, the chart positions tend to suggest that.

Q: What about the private banks, the charts of DCB, Axis bank?

A: These charts are suggesting that chances are that you might see some wobbly movement there because they have come down they looked like a good bargain. But I would suggest that wait for DCB to cross Rs 65 and once it crosses Rs 65 levels then maybe one can actually think of it acquiring some strength. Then you can think of buying into it.

Axis Bank, HDFC Bank more or less suggest that there could be some bounce, some oscillations but it is not giving that much of confidence to actually buy into them at current levels. Chances are you might see some kind of an upswing but then again selling pressure might come in.

Q: What’s your top trading idea for the day?

A: Reliance Petroleum could be one stock that you can play on the long side because despite there had been weakness all around this stock was showing a major relative strength and chances are you might see it going up, I am talking about Reliance Petroleum June futures, the levels Rs 176-179 could be the levels and Rs 167 should be your stop loss.

Another is Ranbaxy, but it might have resistance between Rs 532-534. Suppose it crossed that level on the upside, then Rs 540 would be the level one should book profits.

Q: What sense are you getting from the sugar pack technically speaking?

A: From a technical perspective sugar is still weak but one thing to notice is that Balrampur Chini tends to attract some buying below Rs 75 levels or if Bajaj Hindusthan comes around Rs 165-160 it will attract some buying. But other than playing for the short-term on a technical basis, sugar is still not showing any sign of promise that one can go long from an investment perspective.

I would not give an investment buy call here but one can definitely trade because downside appears to be limited for Balrampur Chini, Bajaj Hindustan as well as Sakthi Sugars. I am not so certain about Shree Renuka Sugars.

Q: How is the chart of Chambal Fertilisers looking to you?

A: Chambal Fertilisers, I would definitely be looking at a buying opportunity because my sense is that if it stays above Rs 78 chances are it will show technical strength and then there could be a movement on the upside at least say about another 10% to Rs 84 - Rs 86 possible in the near-term. I would be looking for a buying opportunity in that stock.

Disclosures:

It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.