Moving averages suggest Nifty could bounce back: Bose

Rajat Bose of rajatkbose.com said that the moving averages for the popular indices are suggesting that there could be a bounce back for any reason. According to him, the averages are suggesting that the lows that have been recorded in January and yesterday would be breached. He added that if the Nifty were to move up, it would face a lot of supply pressure.

Speaking to CNBC-TV18, Bose said that he would wait and see if the Nifty were to move up. He added that if it breached 4448, short positions on the downside could be created afresh.

Excerpts from CNBC-TV18's exclusive interview with Rajat Bose:

Q: The better strategy or the more profitable one at this point seems to be opening up a short though on every pullback you see on the market, would you do that as a Nifty trader?
 
A: The moving averages for the popular indices is suggesting that - well there could be a bounceback for any reasons as one of your experts were saying some good inflation data or whatever that is. But these averages are suggesting that the lows recorded either on January 22 or yesterday would be breached and as of now if the Nifty were to move up, it will be facing a lot of supply pressure between say 4,600-4,640.

If it were really to go to that level it would be more sensible to open up a short position rather than trying to capitalise in on any kind of recovery by playing long because you generally tend to get stuck with these long positions and you don’t take the more profitable short positions.

So I would rather wait, I would see if it were to really move up then I would open up a short position, or if it were to breach 4,448 then definitely a short position on the downside could be created afresh.

Q:  Two financial stocks from yesterday, Yes Bank and IDFC?

A: If you look at IDFC , it is completing a rounded top like a formation. Today if it were to slip below, say Rs 131, that is a support level, then chances are that we might actually see IDFC slipping into something like one Rs 121 to about Rs 118.

Talking about Yes Bank , or for that matter any other private sector bank, things are actually looking pretty bad there, and they can even fall further. Yes Bank has broken several important support levels. Today if it were to break, say Rs 144, which I think it will, then it can even come down to something like Rs 138 or Rs 137. Whether that support will hold is what needs to be seen as the trading day pans out.

Q: What’s Balrampur Chini ’s chart telling you now?

A: Balrampur is actually going down in line with  market sentiment. But unless it falls below, say Rs 76, you won't see any kind of a sharp cut.

One thing which I notice of course since I am an investor in that stock and my views could be a little bias but I see a lot of buying support whenever it comes between say Rs 84 and Rs 78. So unless that support area gets broken, I think Balrampur is likely to hold.

But as of now, if you ask me that if I would recommend buying Balrampur at these levels, no not yet. Let the market turn around, only then you buy otherwise for any reason, it can fall even further.

Q: Have you taken a look at the charts of the other private sector banks as well Centurion Bank of Punjab , Kotak Mahindra , Axis , what are their charts telling you?
 
A: The charts are more or less similar other than ICICI Bank . I would say that it is looking like as if you are looking at a rounding top and the rounding top is about to complete. If you look at HDFC Bank , and Axis Bank that is the kind of scenario that you see. When you see such a formation, and when the overall sentiment is negative then you actually see them going down even further.

Centurion Bank of Punjab I have stopped tracking because once the swap ratio is decided it would be better to look at HDFC Bank, which of course is still looking weak and can come down even further.

My feeling is that if the indications that are there from the Nifty moving averages then these bank stocks would go even further down irrespective of the fact that a person like me is holding Centurion Bank of Punjab in his portfolio.

Q: Two stocks for you, Reliance Petro and Power Grid if you track that?
 
A: As of now I see that Reliance Petro is trading at around say Rs 159. If Reliance Petro were to really move up then it should cross Rs 163-Rs 164, and if it were to really do so then, expect those higher levels like Rs 169-Rs 170, because this is a pullback rally, it may continue as I said earlier that Nifty up to 4600 to 4640, if it were to really go to those levels, maybe Reliance Petro will perform.

Regarding Power Grid , I am not too optimistic; I would still consider buying it at a much lower level. Rs 90-Rs 93 doesn’t really inspire me. I would look for levels around Rs 70 to really buy into this stock. Of course from a trading perspective, if it were to cross say Rs 95, then you expect Rs 98 to about Rs 102, and put a stoploss now below Rs 89.

Disclosures:

It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed.