Go long above 5200; bet on metals, cement: Antique Broking

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Shruti Vora of Antique Stock Broking tells CNBC-TV18 that they were expecting a rally up to 5000 levels, but Nifty around 5200 was not something they were expecting to see. "This is definitely a surprise factor and I think the rally has been primarily driven by money flows followed by stock specific and some macro news flows," she said in an exclusive interview.

She further goes on to say that if the Nifty sustains above the 5200 mark it could go on to 5400 levels. "There could be a short blip around 5400, but if we cross that 5600 is possible," she added.

So as to make the most of this rally, Vora advises traders to go long above 5200, and sees good buying opportunity in some metal and cement names. " ACC and Ambuja are two stocks on the Nifty which will surprise on the upside. Even metal stocks like SAIL , Sterlite and Sesa Goa could surprise," she said, adding that ONGC also looked good.

On the flip side, she says that they are cautious on the Bank Nifty and IT stocks because they are driving closer to their critical resistance levels.

 On the downside, however, Vora says that if the Nifty is unable to sustain above 5200, we could see a decline to 4800 levels.

Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: What's your trading call on the Nifty? How much more upside do you see from here?

A: Earlier in January we were anticipating a run up possibly till about the 5000 levels owing to the oversold setup in December. However, our medium term call was negative because of the close which was below the 4700 mark which was possibly a whipsaw on hindsight. So a rally till 5000 was something we anticipated, till 5200 is something that is a surprise factor, which I think has been primarily driven by money flows which has later been followed by stock specific and some macro news flows.

The appetite for risk on trade I think has gone up significantly and if we see the Nifty sustaining above the 5200 mark, then with a slight blip at 5400, 5600 is possible. However, the risk reward from current levels is certainly not in favor because a short term support is placed somewhere closer to the 5100 level. So in any case if you see Nifty unable to sustain above the 5200 mark, then possibly we are once again headed to the 4800 mark which in that case you see the Nifty once again trading between the 4700 to 5200 range. So I would go long above 5200 but then keep my strict stop losses closer to 5100 levels.

Q: If you wanted to chase this rally on the way up for the last bit, what kind of stocks would you be going long on now with a stop loss?

A: On the Nifty itself two of the stocks which have not been talked about much are ACC and Ambuja which are driving closer to their lifetime highs and would actually surprise on the upside. So these are the two stocks which can be a surprise factor. Over and above this I think it will be metal stocks like SAIL, Sterlite and Sesa Goa which could surprise on the upside.

I am a little cautious on Bank Nifty and IT. The Bank Nifty is driving closer to its resistance band of 10,000-10,300, and 6000 is the critical level for IT. So IT and Bank Nifty are clearly a little more cautionary. But among the larger cap names, I think there is still room for upside in ACC, Ambuja, some of the metal names that I mentioned and possibly ONGC could surprise in the upside.

Q: What is it that you see on some of the key banking counters like ICICI Bank and SBI ?

A: Like I mentioned, 10,000-10,300 on the Bank Nifty is itself a cautionary level for me. Both these counters could possibly see another 5-7% upside respectively, but would avoid going long on those names.

Q: How are you approaching names like PFC and REC which had powerful rallies yesterday?

A: From a shorter term perspective, one can utilize the current rallies in PFC and REC to book profits or possibly exit closer to Rs 200 in PFC and about Rs 220 in REC. But from a medium term perspective, these stocks may have formed their bottoms at Rs 150-130 levels, so any dips to about 7-10% in both these stocks can be used to accumulate the stocks from a medium term perspective.

Q: Any call that you would want to take on the series now in terms of what kind of Nifty indications you are seeing and what you think the upside and downside risk may be for the series?

A: 5100 could be a level which could actually trigger a downside till about 4800. On the upside, 5400 could be a shorter term blip and if we cross that then 5600 is the upside that we could possibly see.

The support would come in from the fact that Asian markets are suggesting a positive bias, but on the flip side you have the US and UK markets are nearing their resistance marks. However, I would be more on the side of caution owning to the fact that January itself has seen a 12.5% gain and that itself makes you a little on the flip side because of the risk reward not in your favor.