Mar 04, 2012, 12.50 PM | Source: CNBC-TV18
In an interview to CNBC-TV18, Vishal B Malkan, CMT, www.malkansview.com finds that after a stellar rally of two months, the market is now getting into a range between 5,350 and 5,500.
Vishal B Malkan (more)
Trading Coach, Malkansview | Capital Expertise: Equity - Technical
For now, his call is a buy on dips before the trigger comes with the three big events lined up to take place – UP election results on March 6, RBI credit policy on March 15 and Union Budget on March 16.
Below is an edited transcript. Watch the accompanying video for more.
Q: What’s the Nifty telling you technically now after the volatility of the last few days?
A: After a strong rally of eight weeks I think the Nifty is getting into a range between 5,350 and 5,500. There are three events lined up in the next 10 days, so this range should hold for a few days before the trigger comes.
Q: Within this range, what should the trading view be? Would it still be a buy on every dips market you think?
A: I think it would be a buy on dips and I guess that the support of 5,350 should also break once before it touches 5,200. As we have seen that the eight week rally which happened so fast that it should happen in six months. So price and time parity should catch up and before we break above 5,600 we should trade in this range for next at least three to four weeks and buy on dips would be a good option for this.
Q: If you had to give us a couple of strategies from now up until the Budget, what would look like a good idea on the technical charts in terms of the Nifty candidates?
A: I would definitely look at stocks which are outperforming the market in the last few weeks. First would be Ultratech Cement which is already trading near the highs. I would like to buy around Rs 1,350-1,400 with a stop of Rs 1,325 for targets of around Rs 1,500 and Rs 1,550. The other one is Tata Motors. It’s almost trading at a lifetime high. I would like to buy around Rs 250 with a stop of Rs 225 for targets of around Rs 300-325.
Q: ONGC has been in the news for other reasons but how does the chart look now?
A: ONGC is still trying to breakout above the range of Rs 300 but because of the negative news it has got back into the range and it will trade between the range of Rs 260-300 for the next few weeks before the next trigger comes.
Q: Today we don’t have such a big window to trade but getting into next week, what kind of a strategy would you approach the Nifty with?
A: I would definitely look at 5,350 breaking and taking support around 5,250. I would like to buy around those levels and not at these levels because there are two-three events which are lined up. Maybe a wait and watch would be a good approach right now.
Q: It’s instrumental what comes out of the Budget for banks and the monetary policy. How would you approach some banks like Axis, PNB and SBI? What do the charts look like?
A: I would like to buy Kotak Bank which is outperforming the other banks and I would be interested in buying Kotak Bank around Rs 540-530 with a stop of Rs 510 for targets of Rs 625 and Rs 675 in the coming weeks out of all the banks.
Q: Aurobindo Pharma has been pretty much volatile. How would you approach it?
A: Aurobindo Pharma is making a range between Rs 100-120 since last one month. I am definitely looking at a higher break above this and a target of around Rs 150 to Rs 160 in the coming week as it has made a strong base at the bottom.
Q: What about your strategy on Voltas that you have for the morning?
A: Voltas is another stock which is also looking good on the charts. I guess it’s also made a base around Rs 100, a strong support with a target of around Rs 120. Once Rs 120 is breached conclusively, I would look at a target for Rs 145 and Rs 150.
Q: You have a strategy on Patel Engineering as well?
A: Yes. Patel Engineering is also showing some strong signs at the bottom. Some accumulation volumes are picking up and I guess the support is Rs 95 with a stop loss of around Rs 90. We look at targets of Rs 140-145 in the coming weeks once it breaks Rs 120 conclusively.
Q: DLF 's chart as well has been exceptionally weak in the last two days?
A: DLF tried to break above the range of Rs 250-260 but it couldn’t sustain and got back in the range. I think it can retest the lows of Rs 180 and Rs 190.
Q: Is there anything in the broader market space, in any of the PSU banks that you would like? Anything else that looks attractive at these levels?
A: I have looked at Dena Bank as one candidate which looks good on the charts right now with a strong base around Rs 80-85. I would look at targets for around Rs 120-125 in the coming weeks.
Q: A couple of these hotel stocks saw a ripple effect on the news with regards to EIH and are showing some amount of an up move. Hotel Leela is up around 10% odd, Taj GVK is up around 8.4% and something smaller like Oriental Hotels is up around 5.6% and Viceroy too is showing a bit of an up move in today’s trade. Does anything look interesting to you?
A: All of them are trading in a range with just a one day event which has happened today. They have to do a lot more for a move up before they can be taken as a long-term bet or even a medium-term bet. I would like more action to follow through on Monday-Tuesday before getting into these stocks.
Q: One final word from your end on a couple of these stocks that have had quite a good run of late - Indiabulls Power and Indiabulls Financials are up around 2-5% odd. Are these stocks something that interests you?
A: Indiabulls Finance is looking good on the charts and a break above Rs 240 would be a good breakout and it can go up to around Rs 270-275 in the short-term.