Be watchful around 4850-4960 levels, says IIFL's Anu Jain

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Be watchful around 4850-4960 levels, says IIFL's Anu Jain

Due to external factors, Anu Jain of IIFL Private Wealth Management advices traders to be cautious around the 4850-4960 level on the Nifty.

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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 HUL See messages about HUL

Due to external factors, Anu Jain of IIFL Private Wealth Management advices traders to be cautious around the 4850-4960 level on the Nifty. "It's going to be a struggle between bulls and bears which is going to continue depending on the inflation numbers today and the results this week," she said exclusively to CNBC-TV18.

According to her, weakness in the oil and gas sector and IT index is bad news for the market. "But the banking index seems to be showing a lot of resilience so the Nifty can really move up with it," she added.

Below is an edited transcript of her interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video.

Q: What are you betting on for the Nifty this week?

A: I was always cautious above 4850-4960, I knew that it could stretch to 4966. There is lot of buzz which I heard last week about 5100. Earlier there was a consensus view that the market would break to 4100, and now there is a consensus that it will go to 5100, but I have seen that consensus is not working.

I think one need to be cautious and anywhere around this 4850-4960 levels. There is distribution happening in a lot of stocks. The pivotal Reliance is again showing weakness. In fact the whole oil and gas sector is breaking down; if you see Reliance is a sell signal, ONGC has a sell signal and even Petronet 's chart has a strong sell signal.

The banking index seems to be showing a lot of resilience and it can move up to about 9125, but it's going to face a strong resistance there. Both ICICI Bank and SBI are at key resistances, so for them to move up is what the Nifty can really move up to those levels. Unfortunately because of the results, IT index is not giving any support. There is weakness in Infosys which is not going to be easy to walk out of.

So I think it's going to be a struggle between bulls and bears which is going to continue depending on the inflation numbers today and the results this week. But the external factors are making me much more cautious than what it was before and I would be very careful.

Q: If you had to bet on the short side around this 4900 level, what is the top short that you would pick?

A: Petronet at this price, give or take another move up to Rs 159 looks good; it can go to Rs 148. Also, if Lupin breaks the level of about Rs 426, it could go down to even Rs 408.

So I would probably look at stocks which are now giving a breakout because I would want to short something which has already moved up sharply, like Larsen or Jet Airways . But I am still waiting for a signal, where as these two actually have already given a signal.

Q: Are you seeing distribution patterns on the technology stocks as well, Infosys and TCS?

A: For Infosys , the support now is at about Rs 2500-2520. Even crossing Rs 2620 is going to be an effort. It may make an effort to go up to Rs 2620-2640 to consolidate. It may stick around there because it's closer to support levels, so I don't see a bigger sell off coming at least in the shorter term. If it breaks Rs 2500, then the next support is at Rs 2380; that is going to be a real tough fall, but doesn't look right now its happening.

It is the same with HCL Tech . It has broken the Rs 401 level and can move to about Rs 378-380. TCS also is holding on. I think the only chart which is not showing that bad a breakdown is Wipro . It's hovering around its 50 day moving average and I think that is showing scope that it could pull up 4-5%. So that is looking the safest to go long.

Q: Aside from RIL, which is the other heavy weight that is making you uncomfortable now, because the first signs of weakness cropped up in FMCG stocks last week?

A: Hindustan Lever is definitely looking weak on the charts, so there is a possibility that some profit taking comes up. Even if the market stays sideways, people may decide that it is probably changing from defensive to aggressive. So if it breaks Rs 381, it closed at Rs 391, you could see as a sharper cut. But otherwise, it could very well be in this range of Rs 393-412.

But if it breaks Rs 383, which is another 2-2.5%, that is where you will see people panicking and taking in whatever profits they have from the Rs 340 odd levels to the move of Rs 380 levels. So that would be a point to probably see that it would move out of that zone.

Q: Of the infrastructure and the metal names, if you had to back anything for momentum on the long side which ones would it be?

A: I would probably say that there could be a little more momentum in the ADAG pack more than anything else. Reliance Infra is at it's a resistance of Rs 410, so if it manages to cross Rs 410 odd levels, then you could probably see it move another 4-5% to Rs 426. It's from the infra pack and it's from the momentum pack of ADAG, but be cautious because it is right at resistance.