Jul 01, 2013, 11.36 AM | Source: CNBC-TV18
Bank Nifty is still below the 200-day moving average, says Jain. Though private banks such as ICICI Bank, HDFC Bank, Axis Bank, Yes Bank, IndusInd Bank are showing some signs of recovery
Anu Jain (more)
Sr VP, IIFL Private Wealth Management | Capital Expertise: Equity - Technical
She is hopeful that by end of this year, Nifty will see higher levels and may even touch 6,200-6,300, but it will find very strong resistance to cross the previous high.
She feels that of all the sectors, such as oil and gas, FMCG, pharma, she'll be most comfortable playing private banks, as it gives most comfort.
Below is the verbatim transcript of Anu Jain’s interview on CNBC-TV18
Q: We had a powerful pullback on Friday. What kind of resistance levels crop up next for the Nifty and would it still remain a good idea to trade long or do you think the best got done on Friday?
A: The fact still remains that having tested the support of 5550 in very adverse situation, it crossed 5750 resistance with a gap up because of the gas policy. If you were to look, it’s a mix bag. You have crossed the 200 day moving average, which is around 5810. It is holding above that, but from here to 5850, rather 5870 to 5920, there are a series of resistances. So it is not going to be very easy to cross this. But the more time it spends over 5800, it is kind of building into the pullback that it has done over the last couple of sessions. If you were to look at individual sector contributions, you have had oil and gas which has also gone over its 200 day moving average, the CNX energy. You have pharma and IT, which have been basically holding on and giving resilience to the market. Now, as usual, the joker of the pack is the Bank Nifty. It is still below the 200 day moving average, but as of the Friday close, private banks at least are showing some signs of recovery coming in, whether it is ICICI Bank, HDFC Bank, Axis Bank, Yes Bank, IndusInd Bank. If those banks keep holding on to these levels and maybe build on it a couple of percentage points, there is a good chance that you will move up to 5920. I am not saying that it is a rally, which will take you to 6000 immediately, but even holding on to the 5750-5800 levels would be a strong move in the current situations.
Q: If this pullback does continue, what is the next resistance level for the Bank Nifty now? Within that space, you have chosen to buy ICICI Bank today. Tell us about that?
A: The fact still remains that if you look at the Bank Nifty levels as such, it has crossed the 11,500 levels, it is at about 11,607. It can really move up to 12,138 if the momentum continues to build. So I would say that there is no strong resistance between 11,600 and 12,138, which is about 4-4.5 percent move. The 20 day moving average is 11,778 so could get some kind of a resistance there. Coming to ICICI Bank, I think the whole private bank league is going to do well. So if I look at ICICI Bank at Rs 1,070, it doesn’t really have a resistance till Rs 1,102-1,105. One can keep a stop of closer to Rs 1,055-1,060 because if the trend were to break, if 5750 were to break, then I think you could see another downturn. That applies to whether it is Kotak where it is at Rs 722, I think once it crosses Rs 728, you can see some movement towards the Rs 760 levels. It applies even to IndusInd Bank, so it could probably attempt those Rs 480 levels. Yes Bank can also see similar levels. So I think that whole pack of private banks can probably do a 4-5 percent in the next one-two days.
Q: What is this market suggesting to you over the medium term though, the fact that it has threatened to get to that 5500 mark, roughly its recent low, but it bounced off from there. Is the primary trend still down or do you think this market is displaying resilience every time it has tested at that level.
A: What the market is indicating is it is going to be a fairly volatile period, so I think it’s not still a buy and hold. If you get 5-10 percent in any counters, what it really indicates is that you should take it and keep it on the side and wait for the better levels to come. It is showing that towards the end of the year, probably you will see higher levels, but even earlier we have discussed this that probably it may patch up to 6200-6300, but will find very strong resistance to cross the previous high.
On the lower side, 5550 this time, despite all major rupee considerations that are held on a day when probably China was down 7-8 percent. So it’s a very broad range between 5500-6200, it is 700 points. So I think at those levels, what is indicative is that patience will pay so book profits at higher levels and get into counters at lower levels. It’s a very simple strategy, doesn’t really need any advice on that front, but the fact still remains it is still going to continue like that for probably next four months.
Q: What do you see on some of these key heavyweight charts? We have talked a little bit about oil and gas, but for the others, do you see signs of strength or do you see a breakdown in some of the key faces over there?
A: Firstly oil and gas, Reliance at the current levels, even if you are getting 2-3 percent lower, I think it is now getting out of its levels where it was touching Rs 770, so the bottom is now going to be between Rs 820-835. It looks that Rs 864 is a very strong resistance, but once it crosses that Rs 902, which we haven't seen for some time maybe in the basket or in the place, you have got a new kind of strength coming out of that sector or even for that matter for BPCL , HPCL . Though I have heard a lot of negative on oil and ONGC , I think they are going to at least give support at these current levels.
IT, only a couple of stocks are showing that kind of strength so maybe it's a fundamental, technical move together. HCL and Tech Mahindra are showing strength. I am still not seeing strength on Infosys and TCS is showing that probably some more strength is left, but nothing really more.
So that leaves pharma, which is doing fairly fine. Sun Pharma and some major ones will do fine. Infra, realty is still really showing that at higher levels, even metals that are probably there would be fresh slamming when they kind of regain some levels.
So for the interim, for today-tomorrow if market holds 5800, probably Tata Steel and Sterlite , even Hindustan Zinc can show some pullback, but come 5920, probably that's the first sector people will ram into, use a short entry point.
So this is the whole point. It's a mixed bag, it is not giving you comfort that there is strength to cross the 5920. So I would like to play a sector or a stock where I am more comfortable, so that is private banks right now since it still gives you comfort, so that's the reason I said ICICI Bank.
Within days of Essar Group signing a mega USD 12.9
Net Interest Income is expected to increase by 3.8
The government has asked RBI and banks to provide
Ashwani Gujral of ashwanigujral.com recommends buy
Speaking to CNBC-TV18 Taher Badshah, Senior VP & H