Regan Homavazir of Darashaw is bullish on the Bank Nifty and expects the uptrend to sustain. He sees ICICI Bank leading the private sector banking pack. The stock is expected to touch Rs 1,500 from the current market price of Rs 1,131. He remains bullish on Karur Vysya Bank and HDFC Bank.
From the PSU banking lot, UCO Bank, Union Bank and Vijaya Bank and State Bank of India are his top bets. "We expect SBI to start its up move and reach as high as Rs 3,500. We see over 100 percent upside in Union Bank, Vijaya Bank and UCO Bank.
Meanwhile, the rupee is appreciating at Rs 55.14/ USD down 0.29 points. Homavazir sees the rupee stabilising at Rs 52-52.5/USD.
Below is the edited transcript of Homavazir’s interview to CNBC-TV18.
Q: The market that seems incredibly range-bound these last few sessions. Is it struggling to take out its higher levels?
A: We feel very bullish on the Nifty and we believe that 6,300 is the target that the Nifty would be trading soon at. What the current technicals say, is that we have been consolidating for the last three-four days, but this is not a cause for concern. We believe that the trend will soon reassert itself. I would only worry a little if the Nifty were to go below 5,750.
Q: What about the metal stocks which have sprung back to life these last few days?
A: The metal index itself was in a bottoming out formation. Now, the metal index shows us a possibility of over 15 percent upside. That is only showing that stocks like Hindalco, JSW steel and Tata Steel would do superiorly better. We are very positive on Hindalco. We believe that Hindalco could go as high as Rs 200. We also believe that Tata Steel can go up to Rs 490-Rs 510 or be somewhere in that range. As far as JSW Steel is concerned, we are expecting it at Rs 1,200.
Q: The big driver is still has been the Bank Nifty. On that what kind of levels would you watch for?
A: The Bank Nifty has completely established its trend and it is bullish. The Bank Nifty has no problem whatsoever so far. We had segregated our picks in terms of the private sector and the PSUs. We believe ICICI Bank is going to lead the way now and we expect ICICI to go up to Rs 1,500. At the same time in the second rung stock we like Karur Vysya Bank a lot. We believe Karur Vysya Bank can go as high as Rs 810 from its current market price. More importantly, we have been recommending HDFC Bank and it has met our target and we continue to remain bullish on it.
As far as the PSUs are concerned, we are bullish on UCO Bank, Union Bank and Vijaya Bank and obviously, State bank of India as well. We expect SBI to start its up move and reach as high as Rs 3,500. As far as Union Bank, Vijaya and UCO are concerned, the three of them show us a possibility of over a 100 percent upside.
Q: Any non banking financial companies (NBFC) stocks that have caught your eyes?
A: The holding companies are looking very good. We are very positive on Bajaj Holding and Investments stock and we believe that this stock can go as high as Rs 1,800. That is our target. We are extremely positive on that stock. Even Aditya Birla Nuvo, which is again a holding company, we are very-very positive on it. We have Rs 2,500 as out target that one should be playing for as an investor.
Indiabulls Services, that currently looks at the cusp of a break-out, looks like it is going to embark on a long-term up move with an immediate price target of well over Rs 440. There have been other stocks which we have been constantly positive on, for example, Zee Entertainment. We said right from the price of Rs 140, that it is going to touch Rs 300 and we continue to stand by that view. So, on Zee, Rs 300 is our first target and Rs 450 would be our second target.
Q: What do you see on the charts of Dow and S&P? Is there weakness coming there?
A: The Dow and the S&P show that the upsides are limited. However it is not conclusive that it would fall, so it is going to remain where it is. We believe that the upsides are definitely limited. We are not seeing the Dow doing too much of-late, so that is a cause of concern, but there is no conclusive breakdown as yet. So, we would not like to take a stance that the Dow is going down.
Q: The rupee-dollar level has come down below 55 once again. What kind of levels do you see there?
A: We have been talking about the rupee-dollar stabilising at about 52-52.5. That is the sort of range for the rupee dollar. We believe that the rupee is going to strengthen against the dollar and sustain the 52.50 range.
Q: A word on whether you are putting out a positional call as well on the Nifty. What kind of stance would you go in to January with, as an index trade?
A: First and foremost the kind of stance would depend on what sort of outlook you are looking at the Nifty with. If you are looking at it as a trader then 5,850 becomes very important for you. Should that go, then 5,750 is a given. So, unless you are taking a trader stance, those two levels become key for you. As an investor, you should not be worried until 5,750 is decisively broken. We believe that 5,750 is going to the floor in this corrective decline. Should it unfold heavily, it would stabilise there. We are expecting more like 6,300 level in the coming year.
Q: What about JP Associates? Would you continue to be bullish here?
A: Yes, we are very positive on JP Associates. We believe that JP Associates technically has done very different things and the trend has now turned bullish. We believe a target of Rs 180 is certainly possible at this current rate itself. We are looking at Rs 180 coming in the next year.
Q: Do you track precious commodities? Is there a big correction looming on gold and silver; something that has been an out-performer for many years now?
A: As far as gold is concerned, we are very-very negative on gold. We are not conclusive as yet, because USD 1,550 per ounce is very important in the dollar denomination. So, if godl should go to USD 1,550 per ounce, then by any yardstick, it has turned itself really bearish. Our next target is USD 1,200 per ounce.
Disclosure: I would like to reinstate that we have been talking of ITC getting out of the portfolio. We continue to standby the opinion that ITC is one stock that does not merit a place in the portfolio at all and we believe it is going to under-perform for the next two years.