Anu Jain, Director, Equities IIFL Private Wealth Management is of the view that Nifty is not reflecting all that is happening on the broader markets. In an interview to CNBC-TV18, she further added there is a possibility of a relief week coming up and if Nifty holds on to 5930-5950 then that would reflect if strength is building up.
Speaking on oil and gas sector she said, I would really look it as a sentiment indicator as to how the market is heading.
Below is the verbatim transcript of her interview on CNBC-TV18
Q: How is it looking after the way the Nifty has been struggling these last three weeks?
A: Nifty is not at all reflecting what is happening on the broader markets; it (broader market) has been bleeding but Nifty is still about 3.5-4 percent down. At about below 10-20-50 day moving averages, obviously it is weak. Looking for a signal to see whether anything is really showing it has bottomed out. Some constituents have started showing that the worst is over, whether it will bounce back from here is a second question.
Despite the usual perception that infrastructure sector is really bad, so that sector and probably CNX midcap 50, both of them are showing that we are close to the bottom. Indices constituents have given up 8-9 percent whereas stocks have given up 20 percent.
However, these two are showing there is some kind of respite going to come to the sector. Some of the larger banking stocks like ICICI are also showing that they are oversold. So you can get a relief week coming for you and whether they can hold on to say 5930-5950 would then kind of reflect whether there is strength building up again. So probably a relief week is coming up with a testing of the strength.
Q: What about the financials, the Bank Nifty and large caps like ICICI Bank?
A: ICICI Bank is definitely looking oversold. It has corrected from almost Rs 1200 to about Rs 1120 levels. If you look at for a longer period of time Rs 1093 is a very good support. If you are looking from the trading perspective then about Rs 1100-1103 is a good support. Given the fact that it has corrected a lot I think there is a chance for a pullback for at least Rs 1150-1160 being optimistic. So about 4-5 percent trading bounce is definitely possible on it. So I would probably play that.
Otherwise, Bank Nifty as such is not really giving a signal which is playable at the moment. It was one of the first ones which gave a breakdown but currently at about 12,336 it is not showing that it is oversold or that there is any fresh action coming into it. So we will have to take on to individual stocks.
HDFC Bank is giving a buy signal, IndusInd Bank is giving a buy signal, Karnataka Bank is showing that it is probably oversold, can give a bounce to about Rs 166. Beyond there is still not any signal, in Allahabad Bank or Dena Bank or any of those smaller constituents. So it is safer right now that even if you want to trade the Bank Nifty it makes sense to stick to an ICICI or HDFC Bank.
Q: Last week the real estate index crashed 7.5 percent. What kind of positions do you see on some of those stocks or what kind of setup do you see on some of those realty stocks?
A: None of them are giving comfort to even say that you can either short more or you could go and buy more. So it is a stay away counter for at least another couple of days till at least the first signal of the CNX infrastructure and CNX midcap carries out to say okay we can do some bargain hunting at these points.
However whether it is a chart of Housing Development Infrastructure Ltd (HDIL), Indiabulls Real Estate, DLF, none of them are giving comfort to further short because they are all severely oversold or to give even a slight trading bounce. One will have to play it intraday, when one sees that Nifty holds on to 5900 probably, a 3-4 percent pullback is possible on any of these stocks. This would be more on the spur of the moment but these would be very short spurs because they get sold into equally fast, so one will have to be very swift into these.
Q: If you had to identify one-two prime candidates from the heavy weights that you think are putting the most pressure on the index, which ones would they be?
A: Essentially, a lot of it has been State Bank of India (SBI) which has pulled up from almost Rs 2180 levels. Apart from that over the last one week, it has been Reliance Industries, Oil and Natural Gas Corporation (ONGC) which has given up. Cairn India has given up. So, if I were to take for the previous week it would be oil and gas, though it is not really showing a big sector wise move but it has also made a lot of impact on the sentiment because oil and gas had been a prime mover up.
Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) despite knowing that there was a hike coming, they broke very crucial levels on Friday. That has left me a little confused as to how to tackle that sector.
So would like to see how they tackle today’s news and whether they can move back beyond those levels However, I would really look at oil and gas as a way to give a sentiment indicator as to how the market is heading.