Optimistic Regan Homavazir, Associate VP-Technical Research, Darashaw sees the Nifty heading to 6,000 and then 6,300 going ahead.
"The Nifty is largely bound between 6000 and 5500. So, there is no real move on either side happening. However, the charts are not bearishly poised," he said in an interview on CNBC-TV18.
However, one should be cautious if Nifty slips below 5,750.
"Look at ONGC between Rs 290 and Rs 300, for a bare minimum upside of Rs 350. We will remain positive on RIL at Rs 850 too, and expect the stock to reach Rs 1150 in due course," he added.
Below is the verbatim transcript of Regan Homavazir’s interview on CNBC-TV18
Q: It has been on again-off again for the market through this week, but essentially what is it looking like the market is trying to do? Is it giving its recent lows a fighting chance or do you think the market is drifting lower?
A: We believe that Nifty has a positive outlook. It is going to rise to about 6000 levels. We last time spoke that 5750 is very important for the Nifty to sustain above and that happened on a monthly closing value basis. So we will continue with the same hypothesis that the Nifty is in a bullish step up and we are expecting it to go to 6000 initially. Post 6000 and 6300, the Nifty is likely to go in a stringing up move. However, in order to have some sort of risk management, we would advice people to be very cautious on the Nifty below 5750.
Q: At what point would you reconsider this strategy because some of your peers are suggesting that even the medium term charts of the Nifty look like they are breaking down and the eventual trend is to break that 5500 mark. What would make you reconsider this theory on the index?
A: First thing is while people are assuming that the Nifty will breakdown, it is an assumption driven by the fact that the Nifty will have to break 5500 for some serious decline. Today as we see the Nifty, the Nifty is largely bound between 6000 and 5500. So there is no real move on either side happening. However, the charts, as far as indicators are governed, are not bearishly poised. So we are expecting the higher side of the range to come at 6000.
Most people in the last month have got caught on the wrong foot simply because of this hypothesis and the Nifty has gone up in a springing move. So I would not want to make an assumption here. The assumption here of breaking down is not yet conclusive.
Q: Support has come in from oil and gas counters, heavy weight like Oil and Natural Gas Corporation (ONGC), Reliance Industries has been up more than down most days of this week. What kind of technical levels do you see on some of these heavyweights?
A: As far as ONGC and Reliance are concerned, ONGC we would be bullish at about Rs 300 which it is at. So ONGC we would not be very uncomfortable with, we rather would recommend people to look at ONGC at about Rs 300 and 290, in between those prices for a bare minimum upside of Rs 350. Post Rs 350 what happens in ONGC would be quite spectacular because we then expect ONGC to reach Rs 560. So that is the move that we want to see in ONGC.
As far as Reliance is concerned we have been very positive on the stock for a very long time. We have been positive at Rs 700, we have reiterated that positiveness at Rs 750 and we would still reiterate that positive at Rs 850. We expect Reliance to move up to about Rs 1,150 in due course, so we are positive on both these stocks.
Q: The one that has been concerning in its weakness and there of its impact on the market is the Bank Nifty. What do you do with that and how are you trading it?
A: The rule that we are imbibing in our fund management or portfolio management strategy is that we are buying banks that are making new highs. So whether it be HDFC Bank, whether it be HDFC Limited, whether it be an ICICI Bank, which is really not making a new high but it is actually on its way up, YES Bank, so these are the stocks that we are very comfortable with holding into a portfolio.
So if you are into those sort of banks, you would not really see any dumpsite on the portfolio itself as far as the bank exposure is concerned. However, now when you look at the PSU space it tells you an entirely different story because the PSU space has bleeded quite a bit, but we are now getting comfortable with State Bank of India (SBI). SBI at Rs 1800 looks like it is a buy.
Q: There is one dark horse we haven't talked about in a longtime but Reliance Communication has been moving with some momentum. Would you say it is a good idea to keep long with the stock?
A: There are a couple of things that we should note in RComm. One, that it is an extremely volatile stock so if you are getting into that stock you will have to get in with a trading mindset. The trading mindset would suggest that you need to cut off all long positions below Rs 150. As long as you are above that level, everything is good for you.