The Indian market has been rangebound over the last couple of sessions. In an interview to CNBC-TV18, Regan F Homavazir, associate VP-technical research, Darashaw says, he sees the Nifty in 5,000-5,300 range. "Should the market move from 5,300 levels then we can look at some immediate upsides of about 400 Nifty points," he adds.
In the FMCG space, he likes Godrej Consumer Products. "Godrej Consumer is a very bullish stock. It could be bought even at the current market price," he asserts.
He is also bullish on Zee Entertainment. "The stock could be embarking on very long-term upmoves. We believe that the target of Rs 300 and in excess of that is possible," he adds.
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee.
Q: Is it bullish or bearish in the near-term?
A: Should the market move from 5,300 levels then we can look at some immediate upsides of about 400 Nifty points. However, looking at it from a much longer term perspective, there are two sides of the story. The Nifty has changed certain parameters that are suggestive of the Nifty being more neutral than bearish. It also means that the Nifty will have to hold the 5,000 level for that outlook to remain neutral. Should it start trading below 5,000, the Nifty will again start to have bearish connotations.
Q: So, right now, you see the range between 5,000 and 5,300. Only if one of the two ends is taken out, will you have a more decisive medium-term view?
A: Correct, that would be the case.
Q: What are you seeing on the chart of the Bank Nifty at this point?
A: The Bank Nifty, just like the Nifty, is at a resistance. However, stocks are behaving quite differently. For example, last time, when we spoke of switching SBI into HDFC Bank, that has turned out to be very profitable. Now, HDFC Bank continues to be our top pick in the banking space.
As far as the second and the third banks are concerned, we could be looking at Kotak Mahindra Bank at this price and so should you be looking at ICICI. ICICI above Rs 1,000 looks, with a longer term perspective, very bullish. The targets could be as good as Rs 1,500.
Q: For SBI, do you think the worst is in the price right now?
A: SBI, in the larger scheme, has fallen from about Rs 3,500 to where it stands now. So, the price correction is more or less over. However, we are not looking at SBI being an outperformer in the banking space. It may do its bit to Rs 2,500, but that is not something that we are looking at.
Outperformance will come in either HDFC Bank or Kotak Bank or ICICI Bank. SBI seems to have done its price correction. But we would like to avoid it as much possible.
Q: What are you seeing on the charts of the metals right now?
A: Our underperformance stance on the metal continues. However, it is at a price point where certain trading positions can be initiated. Certain stocks like Hindustan Zinc and Jindal Steel (JSPL) look very attractive at this price point.
JSPL, with a trading mindset, could be bought at this price with downsides being maximum to Rs 375 to Rs 380. As far as Hindustan Zinc is concerned, the longer term trend is very well established. It is more to do with an investment bet than a trading bet, but it is a higher conviction than JSPL.
Q: In the FMCG basket, you have Godrej Consumer and Tata Global Beverages, what are they telling you?
A: Godrej Consumer is very well established in its longer term picture. It is a very bullish stock. Upward target is about Rs 730 and the second would be about Rs 970, closer to a Rs 1,000. It is our top pick after HUL, which has been our number one pick for the last two years. Now that could be replaced with Godrej Consumer.
Second rung would be Tata Global Beverages and Dabur. Tata Global Beverages and Dabur are now starting to move. They are starting to show some very long term potential. Will they become a wealth creator or not? there are certain levels attached to them.For example, Tata Global Beverages once it moves past Rs 140, it would have the capacity to go up to Rs 220.
At the same time, Dabur over Rs 150 will show a likewise target. So, those short of things need to occur on the charts before we start to get very bullish on Tata Global Beverages and Dabur. But Godrej Consumers is a very bullish stock. It could be bought even at the current market price.
Q: What are you seeing on the chart of the dollar-rupee?
A: Rupee-dollar will settle at 53. We are not looking at the rupee weakening any further because our worst case scenario on the rupee was 56.50. The rupee had deteriorated a little more. However, it was unsustainable and the rupee has reacted very sharply. So, we are expecting it to in due course settle at 53.
Another important thing is Zee Entertainment. We believe that Zee Entertainment could be embarking on very long-term upmoves. Certain characteristics of the stock have changed in the very larger picture. We believe that the target of Rs 300 and in excess of that is possible.