If 4795 is tested, time to buy than go short: Anu Jain

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If 4795 is tested, time to buy than go short: Anu Jain

Anu Jain, senior vice president of IIFL Private Wealth Management joins CNBC-TV18 to give her perspective of where the market is headed.

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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 BHEL See messages about BHEL

Expiry week is here and the market seems to be in frenzy. Anu Jain, senior vice president of IIFL Private Wealth Management joins CNBC-TV18 to give her perspective of where the market is headed. She says though 4700 level is watched, the market could possibly get to at least 5000 by the end of the week. 

Below is the edited transcript. Watch the accompanying video too.

Q: Very bad week gone by, are you watching that 4700 mark everyone is talking about or do you think things may get twisted around a little bit because it is expiry week?

A: Yes, it's a little complicated coming down almost to 4800. I think there is equal chance of it bouncing back at least to 5000 level instead of just the panic that we have been seeing for the last couple of sessions. Quite a few reasons for it... Firstly, we have been grossly oversold dropping from 5400 right up to 4830, I think it's likelihood that you may get a bounce. Secondly, the big point to see is whether 4795 gives up first or whether you can conquer 4960-4966 before that. These are two points which would either make shorts get more aggressive or the longs get slightly more confident. So depending on how we pan out these two levels, I think 4795, if we were to test it today or tomorrow, it's a case for probably taking a cautious buy rather than going short again.

Q: The capital goods index was down 10% last week and of course, BHEL , L&T were one of the worst performers there. How would you trade some of these stocks after the 15-20% cuts they have seen already?

A: That is what I am saying... the reason that I am getting a slightly more positive bend is because, though the index per se is still at 4900, there was couple of things which were pointing out to a lot of interesting things. On Friday, I had not seen a panic which I saw at those 4900 levels, even when the last time the market was at 4720. So the amount of panic on the street was very different.

We started last September 2010 with capital goods and midcaps giving up, which is again going towards capitulation. So is this the beginning of the end is what I am questioning...

I still have to see how it pans out. Capital goods, some of them are actually at 2008-2009 lows, when the indices were far lower, at least a 1000 points lower than what they are today.

Having said that, I think it's time for investors to start looking at these counters with more than a one-year perspective. For traders, I think the bias will still remain to see that at least a bottom is made.

So whether it's BHEL where the bias is negative, whether you are looking at Lanco or Patel Engineering or IVRCL , all the biases are negative. But I think if the Nifty pulls back to 4960, these will pull back sharply by about 8-10% equally. So if there is a risk appetite and there is patience, I think a swing trade in this is possible. The only thing is, I would probably wait for a bad opening, a slightly more panicky state before actually nibbling on to these stocks.

Q: M&M had a fairly bad week last week, post results it's gone down quite a bit, would you buy it here?

A: Yes I would definitely. It has fallen right from making around those Rs 840-850 kind of highs back to Rs 730-735. Right here, where is it is closer to the Rs 740 levels, dips till about Rs 720, it makes a very good buy not just for investment, but for trading also. I would keep a stop loss of Rs 705. The first levels I am looking at about 10-15 days would be Rs 780. There would be slight resistance about that Rs 750-755 levels.
For the investor, these are fabulous levels to get in, the counter has done well, the results were the reason I think the stock gave up from those high levels. So I would pick up either here or on dips, and keep that first target at Rs 780. For investors the target would be much higher, Rs 850 would definitely be a target I would look out for.