Experts see Nifty in 5800-5950 in Jun; give trading ideas

Moneycontrol Bureau

Shrugging of the Reserve Bank of India’s status quo credit policy, Indian indices gained momentum today and closed in positive for second consecutive session following strong global cues.

BSE Sensex rose 147.94 points to end at 19325.87, and NSE Nifty gained 43.10 points to close at 5851.50. Experts believe that 5700, which was tested by Nifty last week could be a strong support for entire June series. “I am not expecting the market to move beyond 100 points from the current level. The revised range for Nifty could be taken between 5800-5950 for next couple of weeks till expiry,” SP Tulsian of sptulsian.com said.

Technical analyst Sudarshan Sukhani of s2analytics.com too agreed that 5750 was a strong support and charts show an uptrend from that level. Anand Tandon, CEO of JRG Securities believes that Indices could experience a small bounce back as the market was over sold, however in the medium term of six months, he does not see any major rebound in the market.

“If the rest of the world starts to do better, you may actually see our market drifting down dramatically from there. When I say dramatically it is not that it will half, but it could easily fall another 10-15 percent from here,” Tandon added.

The Reserve Bank of India (RBI) today left the key policy rates unchanged, the repo rate at 7.25 percent and the cash reserve ratio at 4 percent, saying that only durable receding of inflation will open up space for easing.

Shares of Mahindra & Mahindra and units Mahindra Ugine Steel, Mahindra Forgings rose between 2-10 percent on Monday following the company's auto component business deal with Spain's CIE Automotive SA. M&M will merge all its auto components businesses into Mahindra Forgings. Mahindra Forgings will be renamed Mahindra CIE Automotive, where the Spanish auto components maker will hold 51.1 percent and Mahindra 20.2 percent. Mahindra will use the proceeds from the stake sale in its subsidiaries to buy 13.5 percent stake in CIE, at 6 euro a share.

Tulsian said that deal is definitely positive for Mahindra group as well as M&M stock. He sees the stock of Mahindra Ugine moving to level of Rs 130-150. “Price of Mahindra Forgings may go to level of about Rs 66-70. I don’t see it going beyond Rs 70-71 because the whole open offer permission may come in about three-four months and that will keep the prices hovering around those levels,” he added.

Apollo Tyres which has been falling since its announcement of acquiring Cooper Tire and Rubber Co today closed down 1.24 percent at Rs 63.95. Tulsian believes that the stock has seen huge shorts building up, but he sees renewed buying interest coming in at around Rs 58-60. “I don’t think that much weakness is really seen from the stock from hereon. So, may be the short covering and even the renewed buying interest can come in at a level of sub Rs 60 which can make the stock to move to about Rs 68-70. There is no point in going short now at these levels,” he added.

For Reliance Industries, Tulsian said the stock would trade in Rs 780-Rs 845 range for next two-three months. “The next trigger for the stock is likely to be the price revision for the gas which eventually will be effective from April 1 2014. It may get announced by the government may be in next one month,” he added.