Midcap tech could perform well, if mkts stay firm: Dhawan

Excerpts from Closing Bell on CNBC-TV18 Watch the full show » RELATED NEWS GE Shipping may trade at Rs 210-230 for sometime Sentiments to get a boost if Fed pauses: Sajiv Dhawan ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Bajaj Holdings BSE | NSE 01/06/12 Are Mutual Funds betting on Bajaj Holdings? Other Stocks in this news Dabur India | Hero Motocorp | Hindustan Unilever | Great Eastern Shipping Company | ITC | State Bank of India | Mahindra Satyam | Unitech | Escorts | Mercator | Mahindra Lifespace Developers | Golden Tobacco | Bombay Dyeing and Manufacturing Company | Rolta India | Wipro | Tata Consultancy Services | ICICI Bank | Varun Shipping Company | Polaris Financial Technology | INOX Leisure | Gitanjali Gems |

Sajiv Dhawan, JV Capitals believes the Indian markets are a bit insulated to the US Fed rate hike, but they cannot rule that aside totally because the markets will be dictated by global fund flows.  

"If there is some nervousness and the rates abroad in US go up and Asian markets also start to do that, then you might see some FII flow slowdown again. So we are interlinked, but it really depends up on the state of the market," he explains.

He gives his views on the markets, going forward as well as on various sectors.

Excerpts from CNBC-TV18's exclusive interview with Sajiv Dhawan:

Q: Just about 10% off the historic highs that we have seen on the Sensex. Would you be a little bit nervous or you will see the story continuing?

A:  If you are a short-term trader, the sentiment has been very good for the last three-four days. Once we crossed that 11,000 levels in frontline stocks, there has been a good built up in midcap stocks as well as smallcap stocks.

They are surging across the board today, which shows that the risk appetite has increased, retail investors are coming back into the market and they are latching on to smallcap and midcap stocks. They have moved up very substantially in the last one week. Now the result of all this is going to be a bit of caution, that is some profit taking is expected and we are running ahead of ourselves again.

The key factors are that the Fed rate meet has affected certain sentiment for the positive here, you got FII figures positive, you have got mutual funds figures positive and midcaps are helping reach our sentiment.

So at the moment I think the momentum could probably take the market up, by maybe another 100-200 points on the Sensex, before you do see some profit taking. But I think the market mood is much better than it was maybe a week or 10 days ago.

And despite the cautiousness, I would be long on the Nifty. I think what you should be doing at the moment is that just revise your stoplosses higher. When the correction does come in, which probably will in the next three-four days, then let some of those profits come out back, sit on cash and wait for the next big trigger.

This is because we have been ignoring global markets last week, but this week again, we are following their positive cues. So overall, the sentiments are very good and things are looking much better than they were 10 days ago.

Q: Firstly for a trader, what would you advice for the next hour? Secondly, on the fundamental level, you have been saying that we are outperforming or ignoring the Asian markets. Would you say that if the Fed rate was a cue, then with the Indian markets not been that exposed to the US slowdown as the other Asian markets, this outperformance by India is justified?

A: For the next one-hour as a disclosure, we will be long in the Nifty and several stocks, but we will have stoplosses. If you are a short-term trader and you are looking at just one-two hours, then you got to have stoplosses.

Tomorrow obviously the markets are closed and people will expect global markets to perform well today or if not today, then tomorrow, which is a hope for a good opening on Wednesday morning.

I think if you have been following the trend, you probably have very deep stoplosses, you would probably enter the long Nifty, maybe 100-150 points lower.

So there is no harm in holding some of those positions and yes,  we are a bit insulated to a degree to the US Fed rate hike, but you cannot rule that aside totally because the markets will be dictated by global fund flows.

If there is some nervousness and the rates abroad in US go up and Asian markets also start to do that, then you might see some FII flow slowdown again. So we are interlinked, but it really depends up on the state of the market.

In bull markets, we generally ignore all the global cues, when they are negative and in bearish markets, we ignore a lot of the positive stuff. I think we are in 'no man's land' at the moment.

So I would still be very short in any trading that I would be doing, which means that the timeframe of maximum two weeks to one or two months, I wouldn't be making any call on the market and what's going to happen over the next two-three months, with any real conditions at the moment.

Q: The petroleum stocks seem to have taken heart from that slip in oil prices. What would you do with BPCL and HPCL ?

A: It's one sector, which we just love to buy. If you look at the stocks and the prices, it's crying out to be bought. The only problem is that the government doesn't have the courage and the conviction of the power to their increased domestic prices.

So the fact that oil prices have come off is a small relief. I don't think the market really believes that free pricing control is ever going to be given to the HPs or BPCLs. So that's always going to be taken with a pinch of salt.

At the current prices, I think more momentum with the rest of the market, maybe playing a bit of a catch up. But if the stocks went around about Rs 260-270 for example on HPCL, I would definitely take some profits because fundamentally, nothing has changed.

Oil is still trading at the band of USD 72-78 and if it does breakout again, you can see these stocks sell off again. So it's a nice sector to want to buy in, but at the moment, it is more of a trading call for shorter-term investors.

Q: What would you do with ONGC in particular, since it is not like the oil stock like HPCL or BPCL?

A: That's a hold, as I think it would form a part of any major portfolio. You are not going to expect ONGC to run away 10-20% over a period of week, two weeks. So that's a very different category of stock.

Again if the subsidies and the government were a little bit more liberal, you would see the stock substantially higher. So any sharp decline, and I think ONGC would be the stock, where a lot of investors would love to rush in to buy.

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