Moneycontrol » News » Stocks » Expert Advice

Ashwani Gujral's top five picks for today's trade

Published on Mon, Sep 14, 2009 at 09:25 | Source : CNBC-TV18

Updated at Mon, Sep 14, 2009 at 12:07

72287 Investors following HDFC Bank. Share this News with them.

Share on Tumblr

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

RELATED NEWS

ALSO READ

Nifty

BSE | NSE 29/05/12

Are Mutual Funds betting on Nifty?

Technical Analyst Ashwani Gujral's top five picks for today's trade are HDFC Bank , Archies , Lanco Industries , Godrej Industries and Tube Investment . He advises investors to buy these stocks.

Here are they key levels to watch out for:

HDFC Bank:
Stop loss of Rs 1,460 per share

Target at Rs 1,550 oer share

Banking across the board is showing a lot of strength. We had done a small bank Dhanalakshmi on Friday, so today we have a large bank. HDFC Bank found support at lower levels around Rs 1,460 per share and then bounced back. So that can be used as a stop for today. We could see levels of Rs 1,550 per share on this one.

Archies:

Stop loss of Rs 100 per share

Target at Rs 125 per share

In festival season this stock tends to do well. It did very well a few days back then has corrected for several days and now with a stop of Rs 100 per share, it could move up to Rs 125 per share today. It generally tends to have two-three big up days. So it had one on Friday and it is likely that it will have another one today.

Lanco Industries:

Stop loss of Rs 44 per share

Target at Rs 50 per share

Lanco is one smalllcap kind of stock, had five-six down days, again good day on Friday particularly when the market wasn't too strong. So with a stop of about Rs 44 per share, we can get levels of Rs 50 per share and then Rs 58 per share.

Godrej Industries:

Stop loss of Rs 190 per share

Target at Rs 213 per share

Godrej Industries is in that same mode where Adani was. When a subsidiary is getting listed, these stocks tend to run up. Midcaps are consolidating, correcting and it is likely that they rejoin the largecaps in the rally. So we have got a stop of Rs 190 here. You could buy this with a day's target of about Rs 213 although this could go up to Rs 255-260.

Tube Investment:

Stop loss of Rs 65 per share

Target at Rs 79 per share

Tube Investments turned sideways for about 15 to 18 sessions and then moved out on Friday. This could be bought with a stop of about Rs 65 per share and target of Rs 79 per share. The entire take here is that the final frenzy is yet to start. So, midcaps and smallcaps are likely to do better in the days to come.

Here is a verbatim transcript of an exclusive interview with Ashwani Gujral on CNBC-TV18. Also watch the accompanying video.

Q: What is the call on Nifty now? Do you think it is going to 5,000 next or do you think it needs to give up little bit more ground before it can find enough momentum to get there?

A: Earlier what used to happen is that largecaps sort of tire out and midcaps keep running. This time the largecaps have broken out like Reliance , State Bank of India (SBI), ICICI Bank and they are holding up the index while the midcaps go through the corrections. So finally midcaps tend to follow the largecaps, so sooner or later they will complete their correction and then the entire market should move towards 5,050-5,100 so that should be your broad take. Their stops are pretty close 4,730-4,750. As long as we move sideways above these zones, there shouldn't be any problem.

Q: When you talk about largecaps or heavyweights supporting the Nifty, which particular stocks are doing that?

A: Reliance is broken out of Rs 2,100 and it is finding consistent support around Rs 2,100. ICICI Bank has gotten out of Rs 800 that could be headed towards Rs 950. The entire public sector undertaking (PSU) lot after moving sideways is moving out. You could get Punjab National Bank (PNB) moving towards levels of Rs 850 to Rs 900. State Bank of India (SBI) still has levels of Rs 2,050 ahead. So these financial and sort of oil and gas space still looks strong and metals keep coming back every other day. So largecaps are holding up. If they are able to hold up for a few more days, midcaps will complete their correction and finally market would head up. It won't be so easy for the market to break down 4,730 this time.

Q: How deep does the downside risk look to the market even if it gets to 5,000 or not, on the downside how bad do you think things can get?

A: The strong breakout level remains. So each time we get there that will now act as a strong support. But in case that 4,700-4,730 level breaks down then we have strong support around 4,580 from where we turned this time. So basically market has support at every level because for the last three-four months all it has done has consolidated. So broadly 100 points is what we could have on the downside. Beyond that you get back into that range and keep doing the sideways that we were doing earlier.

Q: What do you think about Central Bank and Allahabad Bank , one was up 14% and another was up 20% last week?

A: Allahabad Bank has been moving in this Rs 80-100 kind of zone; it has moved out of that. Next resistance out here could be Rs 120; long consolidations, big upmoves on large volumes is what makes for a sustained move. I think for Central Bank next target could easily be Rs 138 to Rs 140. Again many months sideways moves, lack of interest and if people suddenly get interested in these stocks, they could easily have 10-15% further from here immediately.

Q: What do you think about Usha Martin and Mukand ?

A: Usha Martin had its move up from about Rs 50 levels. The target was around Rs 76-78. I think most of the midcap steel stocks have had their burst and probably it is time to take some profits off. Same with Mukand, if people got in it at lower levels, it is time to book profits and move towards midcap public sector undertaking (PSU) banks.

Q: Are some of these midcap technology charts tiring? All of them had a really rough last week, down 7-8-6%?

A: I would look at reentering them because they have gone through a normal correction and I think technology is another space which could again start participating. Largecaps like Infosys moved up on Friday. Midcaps like Patni has corrected, back to its 20 day moving average (DMA), if it moves above Rs 407, we could see levels of Rs 440-445 coming in. There are sideways moves again in Polaris, if this could move up above Rs 146, we could see levels of Rs 160. So these strong sectors keep going into corrections by rotations and I think the time is coming where you should get back into Mphasis , Polaris and Patni and all these stocks.

Q: Two more chart-checks from very active midcap stocks through last week, Gujarat NRE Coke and ABG Shipyard ?

A: Gujarat NRE Coke has been moving higher. Rs 62 was a key level here. Once that has been crossed, you could head up to Rs 72 and then Rs 78. Shipping does one-two days of upmoves and then corrects. ABG Shipyard now finds support around Rs 240-241. I think that would be a good level to buy it. Once it finds support there, you could easily see another Rs 100 from there, probably levels of Rs 340-345 are possible. Same with Bharati Shipyard , so entire shipping space seems to be going just through a correction.

Q: What about textiles, would you back any of the textile stocks which were flying on Friday?

A: Textile stocks tend to move one-two days and then level out. The only good stock out there is S Kumars where you have support around Rs 48, target of Rs 61 and Rs 65. Alok and Arvind, two days of upmoves and then back to the same lows.

Q: On midcap real estate, anything that you are picking up on those charts like Brigade, Ansal Properties , Peninsula ?

A: Indiabulls Real Estate looks the most interesting out there. They have corrected quite a bit and sooner or later it is likely that they will bounce back. Even largecaps like DLF has reached levels of Rs 390 from where it finds strong support. Indiabulls Real Estate after correction narrow range, you can buy it about Rs 256, can get back to Rs 305-310. HDIL on this news if gets slammed to about Rs 270-275, that becomes a good buy. So overall these prices which are correct as midcap banks continue to move higher. So the next move probably could be in midcap IT. Real estate still needs to consolidate some more.

Q: Fertilisers were a bit weak on Friday, stocks like Nagarjuna and Chambal , are their charts looking weak to you?

A: They still need a lot more consolidation. It is not as simple as autos as they bounced back and made fresh highs. Nagarjuna is now between Rs 30 and Rs 38; if you get it around Rs 30, it becomes a good buy. You can get out around Rs 36-37. For Chambal, Rs 46-47 is a good strong support. You can probably trade it up back to Rs 58-59 but that is about it. Fertilisers are not showing a lot of strength.

Q: Top trade from the largecaps today aside from HDFC Bank that you talked about?

A: I think something like a HCL Technology - that has been moving in a very narrow range. If it breaks out of Rs 319, I think a fresh move could start. The indication was given by Infosys on Friday by making a fresh high. So this could move upto Rs 330-335. So this is another space which could contribute in holding up the market.

Q: Any thoughts on some of these banks which are moving this morning, Andhra Bank , Bank of Maharashtra , these are the ones which have started fast of the block?

A: It is percolating to those two digit kind of banks, hey had their first move on Friday and if the market can hang on here, I think banks could have another good day. But I think the party would generally end around 10-15% higher because that is where these banks generally end up. Andhra Bank around Rs 110 could be a good level to take some profits. So the breakout happened on Friday, you ride it up probably till tomorrow. So more or less you will be able to capture 80% of the gains which are likely to happen.

Q: Would you start selling some of these frontline metal stocks now?

A: Definitely they are going into a correction. Sterlite started its correction probably on Friday. So metals is a place, which is going into correction whereas banks, technology looks strong. So there is a rotational kind of market and wherever the weight of longs becomes higher, the Nifty is likely to up and if the weight of things, which are going down becomes higher, you will probably see it going back to 4,730-4,750. So probably ranging kind of moves, not a whole lot of upside, not a whole lot of downside.

Q: On a pullback would you look to go short on the oil marketing companies (OMCs) or that is not a great trade?

A: They have reached key resistance levels and from there they are reacting. So yes on a pullback, around Rs 400, Hindustan Petroleum Corporation Ltd (HPCL) becomes a good shot and Bharat Petroleum Corporation Ltd (BPCL) around Rs 600 because nothing fundamentally has changed in all of these companies. It is just that they have run up and if oil continues to head up because of equity market rallies, I think these are good levels to go short on these stocks after substantial rallies.