Anu Jain's top 5 picks for trade today

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Anu Jain's top 5 picks for trade today

Anu Jain, Vice President - IIFL Private Wealth Management at India Infoline advises traders to go short on State Bank of India, Aban Offshore, HCC, HDIL and Sesa Goa.

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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 SBI See messages about SBI Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Aban Offshore | Hindustan Construction Company | Housing Development and Infrastructure | Sesa Goa |

Q: Even if you are playing for a mild pullback on the Nifty? How much do you think you would give it after which point you will start looking for shorting opportunities again?

A: The fact remains that we have got these levels which are 50-50 points away where a pullback can take place like that day we pulled upto approximately 4,750, another pullback can take it to 4,800-4,850. Beyond 4,890 I wouldn't look at shorts because 4,890 would show that the market has got some strength coming back into it. So from my shorts per se for the Nifty levels I think 4,890 would be kind of a stop loss. But I think on any pullback to 4,820-4,830 if it is possible, there would be a good opportunity to go short and that would keep 1% margin on the stop loss as well. So that would be a fair point to get into the shorts.

Q: Would you cover up shorts on metals now or do you think they have much further to go on the way down?

A: It is a cycle. Over the last three weeks we have been shorting. We have been covering and we have been seeing that there is a mild pullback coming because obviously you have to be very nimble out here. So we have covered it but we are looking for opportunities to go back short into all these counters. So it is not that we are optimistic about the counters but just when a counter gets oversold, there is a good possibility like we saw in GMR the other day, a good pullback or you can see it even in stocks like Hindalco that after they get oversold, there is a pullback rally.

So that is the time when you should cover up and then give it up again. It is very difficult to do it and you don't catch all of them but at least you make an attempt to try and do it.

Q: What are the heavyweights telling you -- Reliance and Oil and Natural Gas Corporation (ONGC) now because they too have been a bit soft over the last two sessions?

A: There is definite weakness. Reliance didn't outperform this whole rally. There was a lot of expectation that probably the last leg of the rally would be led by Reliance but despite every kind of positive news coming in, it has kind of underperformed. About Rs 990, it has got resistance about Rs 1,032 and some support at Rs 970 which it has already tried and tested. Rs 970 should stay a support, if that gets taken out, that would augur very badly for the entire oil and gas as well as for the markets.

So that should be a support level which would - if you remember about last Thursday, the first stock to give up its moving average was Reliance on Thursday when it was looking very bad. So Reliance, Maruti broke and then the whole market kind of collapsed on Thursday and Friday. So I would keep looking out for Reliance as a major indicator as to how the markets are moving. ONGC is also in the same kind of range but I would look at Reliance more than ONGC.

The level to watch out for ONGC is basically around the support levels of Rs 1,075, resistance is about Rs 1,130 but I think on a bad day, it can test those Rs 1,010 odd levels.

Q: Any early trade you wanted and you see it on the markets?

A: Not really, I am just watching it very keenly as to what is getting sold off and banking just seems to have kind of a mixed reaction. There is some kind of buying happening on Educomp but not something which would make me take any action right now. So I would probably wait and watch and see how it is, either go short when the market breaks the low of Friday or probably a bounce where you get some meat on the table to go short. So right now I don't think it is a trading zone. It is a wait and watch.