Nifty may retest 3500 levels: Ashwani Gujral

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty?

Q: What about cement? We had a good rally, last couple of days actually in Ambuja and ACC and even in smaller stocks like Gujarat Sidhee Cement. How would you approach that space?

A: Cement has been showing much greater strength than other sort of global commodities and probably it is something to do with the rural space. However, it will not outperform the Nifty as the other spaces are. It will probably be sideways. So cement is a space where you could hide and I think this is a rural focus of the budget would help these stocks go up. ACC's next target here could be around Rs 820.

Q: Is there more downside to Chambal Fertilizers?

A: It has already been smashed up so much. I think it is probably ready for a pullback. It has support at around Rs 51 and you could see pullbacks to about Rs 60-62 but all of these high beta counters if we go down to 3,600 then there is more downside. The final kind of level here could be around 43.  

Q: Before the markets open, would you play for a bounce if you were a short-term trader today?

A: See the sort of pattern we expect is that the markets makes a fresh low early in the morning and then during the rest of the day you get a short-term recovery. So yes, if we break 4,060 and go down I will try to buy that dip with a 40-50 point stop.

Q: What are the chances that the pullback does not materialize that you sliced straight below 4,000 in the Nifty in this move? Do you think it is likely and where would you keep a stop loss on a long trade for fear of that possibility?

A: You would keep a stoploss just below 4,000 because that is a physiological level. As markets do not go up in a straight line they do not come down also in a straight line. Once you had 10% in a week most people are hurting. There is really not enough room to go down. You need some sort of pause, some breath of fresh air before price selling comes in. So around the third day some sort of pullbacks starts developing. Today metals on the international exchanges have sort of have come back. Dollar has weakened, crude has some back. So things are pulling back and we have seen that most markets do things together. Thus, one day of pullback is not such a bad thing.

Q: Couple of charts checks on Sesa Goa and IndusInd bank?

A: Sesa Goa repeatedly finds support around Rs 170-175 and now it is moving back up. So it is in that nice range of Rs 175 to about Rs 225. In case metals start coming back, this is the stock which will do the best of the lot.  

IndusInd Bank is stronger than the other banking stocks but it probably cannot move against the sector. It has got support around Rs 72. If it can take out Rs 94 maybe in an unlikely event Rs 116 but you need to really sell it off in case it starts moving above Rs 94.

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