Nifty in a testing mode, says Anu Jain

According to her, one would have to see 5,350 and 5,380 breaking out.

Also read: Nifty has strong support at 5240-5250, says Aditya Birla Money

Below is the edited transcript of her interview with Udayan Mukherjee and Sonia Shenoy.

Q: How you would approach the Nifty now?

A: The Nifty is actually now into a testing mode. We have had these periods where it shows the inclination to breakout and you have stocks like Reliance , ITC and HUL giving it a support, but SBI , Bharti have weakened. So, you are back to those levels where the breakout is not negated, but not yet confirmed.  You are close to those 5,280 levels. Infact you were close to testing that on Friday.

The PSU bank index is definitely showing tendency to breakdown. PSU banks have closed at 2,810 on the index. There is a chance of atleast a 4-5% correction more on those charts, before a bottom is formed. SBI, minimum Rs 1,840 target seems to be the call of the day.

For it to really breakout, one would have to see 5,350 and 5,380 breaking out. So, you are still in a no trade zone on the Nifty. It is getting to a conjunction zone of only 100 points.

Q: Out of three big losers on Friday, is there anything that you would buy on a dip Bharti , Tata Motors or Ranbaxy ?

A: Ranbaxy is still a sell. It is going to go and lose another 3-4% from here. Tata Motors is going to probably have support around those Rs 228 kind of levels.

Bharti is closer to support, but there is a possibility that it may go down to about Rs 235-240. At these levels it is a good buy. Whether it will pick up momentum, is something that you can't say at this level, not even a short covering bounce. But it will stop falling.

So, I think you will see some kind of a short covering happen, which may give it a 3-4% bounce from here. But I think between all of those Ranbaxy still remains a sell. Bharti is neutral at these levels.

Q: Midcaps did not do very well last, many of them faltered. But Jain Irrigation had a strong close. Do you think it is good for more?

A: Well it has got momentum coming into it plus the technical indicators are definitely going towards the positive. So, you have got the stochastic giving buy, you got the RSI (Relative Strength Index) almost at a buy, the MACD is converging to give a buy.

Since it is a momentum for those who want to play it for the momentum, I have given a very strong and close stop loss of just Rs 0.50 at 83. If you want to play it on the swing trade, then I believe you should keep it closer to Rs 81.70. The first target for the smaller shorter term period is Rs 86 which is 3-4%. On a slightly more, 10-15 period zone you are looking at Rs 89-90 as a target.

So, against the market strong build up, something which is not very overbought. I think it is a good pick.

Q: Sun Pharma has been in the news for fundamental reasons. Technically, you like that stock as well?

A: Technically it has been making new highs. The 10 day average is now at Rs 664. Whether it will close on Rs 675, I think there is greater than 80-85% possibility that over the next one month you are going to see traction towards Rs 720-730.

In the short term closer to Rs 664 is a good point to pick up. Your stop loss should be Rs 658. For a shorter period I am looking at Rs 690 which was a previous high as a small resistance.

But if it crosses that you will see up to Rs 720-730 as the target. This is more a swing call rather than a one or two day call.

Q: Has Bank Nifty confirmed any kind of breakdown last week or that also remains in a no trade kind of zone?

A: Bank Nifty is still not because it has got closer supports to 10,330 kind of levels which are not too far off. It is at about 10,350 that is 20 points. So, below that yes there is a possibility that it will start breaking down. Essentially, more because of the PSU bank participation.

If you were to look whether it is SBI or PNB , BOB , BOI - there is a good breakdown possibility which exists. But since they are very close to supports, I would wait for the Nifty to breakdown along with them before taking a short call. Hence, I hesitated to give a short on those today because they are very close to supports. If there is some kind of support happening at those levels you may actually see the whole index as well as the Nifty bouncing back which is a good 20% chance.

So, I will wait and watch for that. If that doesn’t happen, then obviously the best place would be to short the bank Nifty because you can't short the PSU bank index.