Nifty may test 3600-3700 levels: Ashwani Gujral

Excerpts from Bazaar on CNBC-TV18 Watch the full show » ALSO READ See previous views by Ashwani Gujral See what other Experts & Brokerages are saying about Subex See messages about Subex Nifty BSE | NSE 29/05/12 Are Mutual Funds betting on Nifty? Other Stocks in this news MindTree | ITC | Hindustan Lever Chemicals | Chambal Fertilisers and Chemicals | Nagarjuna Fertilisers and Chemicals | Ashok Leyland |

Q: What about the fast moving consumer goods (FMCG) heavyweights and whether you are seeing relative strength there, ITC , Lever even some of the smaller ones like Marico?

A: ITC is sort of pausing around Rs 210-211. Once it can take that area out, you could see Rs 225-230. You could hide there.

Hindustan Lever has come back from a key long-term level of about Rs 280-285. Once that can be taken out, you could see Rs 305 getting out there.

If we get to 3,600, this is one space that will outperform the markets. So people could be in these sort of oil marketing companies (OMCs), FMCG, pharma, the things that don't perform in a rally are likely to perform now.  

Q: What do you think about Chambal Fertilisers ?

A: Chambal Fertilisers is likely to now find support around Rs 43 to Rs 45.

Also, its twin Nagarjuna Fertilisers could find support around Rs 26. But those are now levels where people can think about buying because a lot of pain has been priced-in to these fertilisers stocks but sure they could come down a bit more. Resistance now on Nagarjuna could be around Rs 34 and then Rs 37.

Q: Also give us a quick word on Ashok Leyland .

A: Ashok Leyland had a large move and then fell. It is in a range of about Rs 28 to about Rs 36. However, overall autos have also started slackening a bit. So Rs 28 is a key level to watch.

Q: What do you do at 3,950? Do you cover up your shorts once or do you let them ride?

A: Key market insight is that the market which gaps down tends to close at the extreme. That extreme could be lowered down or it could come back up. So it will attempt a pullback but whether or not that sustains is a question. I would look at Friday's low, 3,977. In case the market starts sustaining those levels then you would think that some sort of pullback is starting out but generally speaking gap-down days, they tend to close in the direction of the gap and at the extreme.

Q: For you some of these sugar counters--they are putting up a bit of a fight today.

A: It is a losing battle as long as the market stays below 4,000. Yes, Bajaj Hindustan is getting into that Rs 135-140 zone. Medium-term players could get in but you cannot expect immediate returns if you are willing to take 5-10% further downside then those are levels that you need to buy on but immediately you will not get any returns in the next three days. So sugar has corrected quite a bit, it was a strong group earlier. Overall global sugar futures still look quite strong. So that is a space you need to get in on all declines.

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