Oil & gas space can slip 5-10%: JM Financials

Excerpts from Bazaar on CNBC-TV18 Watch the full show » Nifty BSE | NSE 30/05/12 Are Mutual Funds betting on Nifty?

Oil & gas space can slip 5-10% from current levels, says Gautam Shah of JM Financials.

Shah told CNBC-TV18, "Sometime back in December when a stock like Reliance and when the oil and gas index itself was moving up there was this belief that you might actually see an upside breakout and Reliance in fact got to that level of Rs 1100, Rs 20 more and the scenario could have been a very different but once again the stock has got into that range and now its at the lower end of the range. Instead or Reliance I think if you look at the oil and gas index itself it has actually witnessed a breakdown a few days back and that really tells me that this underperformance of the last 15 months is actually going to continue and might just accelerate going forward and you could actually see some of these oil and gas stocks loose another 5% to 10%."

He further added, "It is an index heavyweight segment, there was this feeling that the next leg of leadership for the market to move higher could come from oil and gas and it looks very likely in the second half of December but things have just not played out and clearly there have been supply every time the stock has approached resistance levels and in this market you don't touch underperformers because they can continue to make lower lows."

"If you look at infrastructure space, realty space, power I think these are segments that can see substantial downside from current levels and I would not be surprised if some of these sectors actually got down back to the March 2009 lows. So yes underperformers I think are complete avoid and out of some of the out performers maybe the telecom pack, which is looking relatively okay there would be some trading opportunities but overall I think this is a market where nothing is really being spared, so maybe you will have to look at it different asset class altogether."