In an interview with CNBC-TV18, Amit Gupta of ICICI Direct, spoke about his reading of the market and his outlook.
Below is a verbatim transcript:
Q: Give us a word on the Bank Nifty where most banks seem to suffer quite a lot except for Axis Bank. What was happening on the index in your market?
A: My sense is that Bank Nifty is still holding 12,500, which has remained a very critical support.
Another critical level is 12,850 below which we have been consistently trading in this whole series. So far, we have not been able to close convincingly above it. Once Bank Nifty closes above 12,850 then I think the move towards 13,200 is there on the cards.
So, if 12,500 is coming down, I will be the buyer again in the index and I will look for the targets of 12,850 and 13,200.
Q: Tata Chemicals is one of your top mid-cap ideas today for trade?
A: Yes. I think 68 percent of open interest (OI) is still left in Tata Chemicals in this series, which will be close in next two days. In the month of December, the stock moved from Rs 310 to Rs 360 in a span of only 3-4 sessions. So, I think the shorts are clearly stuck up in the stock. Since then in the whole month of January, we saw it hovering around Rs 360-365 or Rs 355 kind of levels. It has not come down after such a sharp move.
My sense is that, when such a high OI is left and the bias is more into the short side, Tata Chemicals is a good candidate for short covering now in the next two sessions. If it is coming closer to Rs 360, buy this, look for a target of Rs 380-385 and on the downside keep a stop loss around Rs 345. This is an important stop loss because 50-day moving average (DMA) is placed above this level. So, I think it should not be breached.
Q: You were talking about some of these banks, what about something like a Federal Bank which you seem to be bullish on?
A: I like Federal Bank. If you look at the private banking space, this was one stock which was not moving before but afterwards we saw a very good move from Rs 500 to Rs 540-550 levels.
Consistently, we have seen very good delivery pick up in the stock starting from Rs 460 to Rs 480 levels where heavy delivery base buying happened and afterwards it moved up. I think, the current fall is just a retracement of the overall move from Rs 460 to Rs 550. So 60 percent comes closer to Rs 495. That will be a good level to buy the stock again.
If you look at the OI in the future segment, it is still at elevated levels. My sense is, with the kind of rollovers we are seeing -- which is much higher in Federal Bank and other one-two private banking stocks -- this is one pick from the private banking lot that is looking good right now. I think on the higher side, targets of Rs 540-545 again can be tested.