See new low before fresh high; support at 4300: Anu Jain

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See new low before fresh high; support at 4300: Anu Jain

As the market trades into the end of this year, the question still is whether or not it is really going to be a 'happy' new year at the Street? Trimming down the hopes, Anu Jain, Senior Vice President at IIFL Private Wealth Management says on a medium-term basis, the trend line as yet, continues to be negative.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » 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

As the market trades into the end of this year, the question still is whether or not it is really going to be a 'happy' new year at the Street? Trimming down the hopes, Anu Jain, Senior Vice President at IIFL Private Wealth Management says on a medium-term basis, the trend line as yet, continues to be negative.

"There would be a new low before a new high. And, 4,300-4,400 levels are where you should get the support. I would still be negatively biased but play each cycle. However, there are possibilities of very strong pullbacks, hence, one should be aware," she said, in a interview to CNBC-TV18.

Talking about the bets going into 2012, Jain says it is still the big frontline names alone that show muscle. "There is no breadth in the market, so there is no buying or short covering happening in midcaps. Hence, stick to the large cap names like Infosys , TCS , Reliance , Bharti and Hero MotoCorp , with very close stop losses," she reiterated.

Below is an edited transcript of Anu Jain's interview to CNBC-TV18. Also watch the accompanying video.

Q: How would you trade the index going into the end of this year? Does it look like there is a bigger pop coming or would you clear out Nifty positions now?

A: We were positive on the market when everyone was negative, so we did make some buying out there. Coming towards Expiry Options, the whole expiry sessions is usually volatile with a bias towards either side. There is a strong resistance in the 4,750-4,800 levels. Essentially, when the market closed over 4,750 levels yesterday, it makes shorts more uncomfortable than the longs. If we can sustain that there is a chance that you can pull up beyond the 4,800 to about 4,850-4,900. We had seen that option expiry always gives that kind of volatility because the maximum expiry would be about 4,900, put position would be around that level.

So, if I were to take the bias, it will be positive. If I had to keep a stop loss, it will be essentially at 4,720 levels. So, as long as 4720 is holding the bias has to be positive but if that is broken bears will get an upper hand. So, until Thursday you can probably see higher levels but the risk trend, beyond Thursday is a question mark.

Q: On a medium-term basis, what kind of range are you plotting for the market? Do you see potential beyond 5,000 levels on the upside?

A: Essentially, it would be very difficult for the market to scale up to 4,900-4,950 and that is where the cap of this rally is, where it again goes back to test the lower levels. So, you see a lot of presumptuous shorts building up. You have support in the 4,500-4,620 zones. You will be doing the range 4,600-5,000 for quite sometime. You would need some major triggers, maybe politically or internationally to pull it out either side of the trigger.

The trend line still continues to be negative, so I think there would be a new low rather than a new high first. I think 4,300-4,400 is where you should get support. So, I would still be negatively biased but play each cycle, you get very strong pullbacks so you should be aware of that.

Q: So, for this positive bias for the very immediate term, if you had to ride it on the long side, which stocks would you choose from the front liners?

A: Technology has pulled it up, where the strength of the counter is. So, if you want to play strength, it is obviously Infosys which is looking good and can pull up anywhere between Rs 2,860 and Rs 2,900. TCS is looking extremely strong and can basically go towards Rs 1,200 level.

Within that same counter, HCL hasn't really moved up, so just for pullback if you want to take chance of a stock which hasn't moved up then that to about Rs 388 looks good for about Rs 400-402-403 that is one.

Reliance has been positively biased, so that can give you a couple of percentage again and I would think there is scope in Bharti and Hero MotoCorp.

There is no breadth that is following it up, so there is no buying or short covering happening in midcaps. Hence, stick to the large cap names and very close stop losses.