Anu Jain bats for IT stocks in current environment

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Anu Jain bats for IT stocks in current environment

Lack of stability in the markets keeps even L&T, Bharti Airtel, Idea Cellular, Axis, DLF around resistance levels says Anu Jain (Vice President - Private Wealth Management, India Infoline. IT stocks more or less still the safest.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Anu Jain See what other Experts & Brokerages are saying about Larsen See messages about Larsen

Lack of stability in the markets keeps even L&T , Bharti Airtel , Idea Cellular , Axis , DLF around resistance levels says Anu Jain (Vice President - Private Wealth Management, India Infoline. IT stocks more or less are still the safest, she says.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: What do you expect this week after being so tightly range bound?  Is it a breakout or a breakdown from the range that you are expecting?

A: I was positive at 4,560, now it gets very tentative at this level. Its just that the oscillators are overbought, volumes are not convincing and some of the charts are giving fresh breakdowns. The charts which are sustaining also have started to show a little amount of tiredness. So if you see the L&T move now and if it doesn't kind of consolidate at this level you will see it coming down again. So I am a little skeptical at these levels.

Yes 4,800 has been our target for the last one week. If you do cross that then you can rush to about 4,900 but any move from 4,800-4,900 has to be sold into, just like the move at 4,560 and I was ready to buy. So increasingly from here whatever momentum pulls it up whether its 4,800 or 4,920 - it has to be sold into. Individual stocks that are looking very weak are probably telecom, autos  and even real estate.

More so I think discomfort is increasing and the Friday move has left me even more rattled. Instead I would look at the opportunities on the higher side to lighten up. It  does look like a distribution pattern.

Q: You singled out telecom; Bharti Airtel is still looking weak technically?

A: Yes, Bharti Airtel is looking weak and so is Idea Cellular . Both of them are looking bad. Bharti is around those levels where it had hit a bottom last time about a few weeks back. But right now its looking that probably where it closes at Rs 330, if it breaks Rs 322 level around which it bottomed out you could probably see it going to Rs 304 and that's not comfortable. Even Idea is giving a very similar pattern where it is showing that its already given up quite a lot over the last one month but its showing that it could probably give up another 5-6% from there. Only Reliance Communications from that sector for obvious reasons is doing well. So I am skeptical on the whole telecom sector.

Q: How is Bank Nifty or some of the leading ones like Axis and ICICI looking technically?

A: Maximum might is with State Bank , as it has stayed up last week. So has ICICI which is showing strength. State Bank on the charts still remains short on every rise at Rs 1,672 approximately where it closed which is 20 day moving average. It will get another round of short covering only if it manages to close over Rs 1,720 then it can pull up right up to Rs 1,800. I don't know what can do that, maybe a CRR cut or something to that effect. ICICI is looking decent but it's got resistance very close by. So where it had closed at Rs 751, Rs 756 to Rs 764 does show very strong resistance. Axis on the other hand stays completely weak so it seems the first one to breakdown.. On Bank Nifty it is about 8,488, it's around those resistance levels. If it manages to hold on here, pull up then it can do 3-4% move again but I would be hesitant to go long on this sector right now. Probably use any kind of bounce to exit any positions or go short. Hence I do feel that there is definitely no stand to make a fresh buy of even some stocks like Axis. I would stay off.

Q: You are also short on DLF in the real estate space today?

A: The fact is that the sector is definitely looking weak. Apart from that it's giving a fresh breakdown on the charts. Like I said that the market can move up a bit so you can short either here depending on how market opens up today or up to Rs 179. I would keep a stop loss at around 10 day moving average of Rs 186 because that's where it faces resistance and that's where the trend changes. The breakdown is giving a huge target up till Rs 142 but that's not in a day or two it's over a period of month to month and half and if the market goes through crisis. So I would use any opportunity of market going up to get into short into this. The short-term target would be Rs 160 so it could play accordingly either for the short-term for Rs 160 which would be about two-three weeks or over a period of two months for about Rs 142.

Q: Would you stay long on the CNX IT or any of the stocks there?

A: Till Infosys holds on to Rs 2,780-2,800 level there is a case to be long on to it. If it gives up that then one would have to revive the situation. At the same time at Rs 2,920 there is strong resistance so it's finding a cap out, out there. What happens on the result is anybody's call but you have to use either of the breakouts because we have seen it doing at every result something on either side. Thus I would keep that as a trigger point to either go long or short. TCS on the other side is finding very strong resistance at Rs 1,200. so if it goes up Rs 1,180 to Rs 1,200 comes down at Rs 1,169. On the charts it was showing strength but now it's kind of petering out. I think the only stock which is giving some confidence is HCL Tech which has gone up to Rs 388, is consolidated and moved back to Rs 410-420. I think that is looking interesting to go up to Rs 443. So if I had to play to sector I would probably with a stop loss closer to Rs 402 buy that on dips.