Nifty may fall to 5,450 if it doesn't hold 5,600: Darashaw

Indian equity benchmarks were flat in early trade on Tuesday following lacklustre trade in global markets and ahead of expiry on Thursday The Nifty declined 9.15 points to open at 5,708 levels.

Going ahead, the target for Nifty is seen at 6,300 levels. "It is going to be a psychological barrier to move past it," he said in an interview to CNBC-TV18.

The banking index witnessed a breakout and looks very bullish, one can expect stocks in the financial sector to lead rally from hereon. HDFC , HDFC Bank , JK Bank ate his top picks from that space. "I would be buyer in these stocks at this price. Should it give me an opportunity any lower, I would look at it," he added.

Below is the edited transcript of Homavazir’s interview with CNBC-TV18.

Q: Is the uptrend still on for the Nifty or are you getting a bit worried?

A: Given the current setup on the Nifty, it is important that the Nifty sustains above 5,600. Should it not do that then it will go to 5,450. That decline is a buying opportunity. Considering that the long-term trend for the Nifty now is bullish, we would buy on declines. So it is a buying opportunity for the Nifty up to 5,450.

Q: You think it is a higher probability outcome for the Nifty to go to 5,450 or do you expect this 5,630 support to hold out as it has through October?

A: If it holds, stocks that are looking bullish like HDFC, HDFC Bank will continue to keep outperforming. For stocks like ICICI Bank the trend is absolutely established.  I would be buyer in HDFC, HDFC Bank and J&K Bank at this price. Should it give me an opportunity any lower, I would look at it.

Q: What kind of targets would you have on the Nifty on the way up? What is the next logical target in this uptrend according to you?

A: The logical target seems to be around 6,300, which is the equivalent of 21,000 on the Sensex. It is going to be a psychological barrier to move past it. We will have to focus on financial services more closely, because the clue is largely going to be coming from there. Considering the bankex has also given the breakout and looks very, very bullish, I would assume that the financials are going to lead the rally.

Even in the financials, if we look at the second rung I would like M&M Financials, FinServ at this current price with a potential target of Rs 1,150. A new entrant in the portfolio that should come is a midcap which is Bajaj Holdings and Investment. Bajaj Holdings and Investment at least has a target of Rs 1,300. The longer term picture looks as bullish as Rs 1,800.

Q: What about the Bank Nifty itself? What kind of targets would you set there?

A: The Bank Nifty gives us a target 20 percent higher from this current price.

Q: What kind of targets would you have on the Nifty on the way up? What is the next logical target in this uptrend according to you?

A: The logical target seems to be around 6,300, which is the equivalent of 21,000 on the Sensex. It is going to be a psychological barrier to move past it. We will have to focus on financial services more closely, because the clue is largely going to be coming from there. Considering the bankex has also given the breakout and looks very, very bullish, I would assume that the financials are going to lead the rally.

Even in the financials, if we look at the second rung I would like M&M Financials, FinServ at this current price with a potential target of Rs 1,150. A new entrant in the portfolio that should come is a midcap which is Bajaj Holdings and Investment. Bajaj Holdings and Investment at least has a target of Rs 1,300. The longer term picture looks as bullish as Rs 1,800.

Q: What about the Bank Nifty itself? What kind of targets would you set there?

A: The Bank Nifty gives us a target 20 percent higher from this current price.