Another break in the market could lead to 100-150 points loss on Nifty, believes Ashwani Gujral of ashwanigujral.com. A correction is not very far.
Agreeing to the view, Mitesh Thacker of miteshthacker.com says that unless Nifty gets past 8,650, it is better to stay on the short side.
“In the middle we will get some intraday pullback and rallies,” he adds.
The upcoming Diwali season is likely to be for consumer goods and hence, stocks like Voltas can be looked at, says Gujral.
Thacker has a buy call on DHFL and sell calls on Andhra Bank and Dish TV.
Below is the transcript of Ashwani Gujral and Mitesh Thacker’s interview to Anuj Singhal and Surabhi Upadhyay on CNBC-TV18.
Anuj: Your big call was that market has made a head and shoulder pattern and is now heading towards the 200 day moving average. In that case do you stick with your sell on rally theme for next week as well?
Gujral: Basically, you need to know what are the points where any analysis fails, so let’s not try to make it a prediction in case this 8700-8730 zone is taken out then the sell on rally thesis again changes, but as long as that level holds on even if you spent couple of days in this zone, chances are that at some point 8550 will get taken out.
It is a bull market so what you have on your hands is a correction. So correction need not be going down every day, but definitely the way it shaping out you just need one more break you will probably lose another 100-150 points fairly easily. Just as hanging around 8550 I don’t think can be taken as strength.
Surabhi: What about you would you for next week rather trade on the long side or do you think this market is still looking a little weak and you would look at short on the index?
Thacker: My sense is very similar that basically we have made a bearish pattern. The underperforming stock for the index to me is the banking side that will also keep pressure on the Nifty, so unless until Nifty gets past 8650 I will remain on the short side, similarly the corresponding level for Bank Nifty is close to about levels of 19350 to about 19300 unless until that gap is being filled, both the indices will continue to show negative trends.
Now, what can happen in the middle is that we will get some intraday pullback and rallies, but I think overall those will be from a trading point of view good levels to short at.
Anuj: First your thoughts on NBFC because that again did well on Friday and your longer term calls now?
Gujral: Some stocks will not go through a deep correction and they will continue to move up. NBFC probably inflation played a role and you saw Can Fin Homes, Dewan Housing etc. Stocks which have turned today and given you 5-6 percent moves chances are may not participate as much in the correction because correction would be large stocks, the once where institutions and FIIs have participation, so NBFCs in all declines need to be bought, even stocks like Bajaj Finance etc have corrected quite a bit. L&T Finance and Holdings so across the board there should be buying and I believe another leg of upside may start if inflation remains tepid and more rate cuts start getting expected.
As far as weekly calls Voltas is another one which is now beginning to move up. Generally, Diwali sort of period good for consumer goods, so probably look for targets of Rs 500 out here in the next 2-3 weeks.
Natco Pharma seems to have turned around. This used to be erstwhile winner and chances are it completed its correction. We should look at levels of Rs 700 again in next couple of weeks and with defence and the kind that we can see around us BEL is likely to resume its rally. It has done it consolidation, so maybe if you buy around here target of Rs 1,400 is easily possible.
Surabhi: Your trading ideas for next week and maybe just a thought on the way a TCS and Infosys managed the day, Friday was a big day for both of these stocks. TCS despite all the negativity ended up positive and Infosys was also fighting hard from the lows, didn’t quite close positive, so your thoughts on the two tech giants and trades for the next week?
Thacker: TCS is at a very interesting level, when the company sometime in early September suggested a downgrade or downward revision of the projections, the stock bottom out at around Rs 2,320 mark and today also managed to hold on to that level on a closing basis. My sense is that there could be some kind of a base formation happening over here between levels of around Rs 2,320 to about Rs 2,440 and if these two levels held out for some time, then we can see some kind of upward reversal.
Infosys on the other hand while had a very choppy day, but on a trend basis the stock is practically doing nothing. It is still trading between range of about Rs 1,010-1,060. Today it went passed both the levels on intraday basis and managed to close in middle of the range. I don’t have any signals on trend side as yet, so my belief is that this range of 50 points might continue for next 3 weeks to come by.
On my stock ideas I have two sells and a buy. The sells on an Andhra Bank that a sell below Rs 55.5, sell then with a stop at Rs 58 for targets of Rs 50. A sell on Dish TV with a stop at Rs 95.5 for targets of around Rs 88 and one buy call that is on DHFL which ended the day very strongly that is a buy above Rs 304 then keep a stop at Rs 297 and look for targets of Rs 325.