Nifty to head towards 4640: Ashwani Gujral

Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Nifty may edge back to 4,750 levels Nifty may edge back to 4,750 levels Where will the Nifty find a bottom? Where will the Nifty find a bottom? ALSO READ See previous views by Ashwani Gujral See what other Experts & Brokerages are saying about Jaiprakash Asso See messages about Jaiprakash Asso Nifty BSE | NSE 10/02/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Lanco Infratech | GMR Infrastructure | JSW Steel | Bajaj Hindusthan | Balrampur Chini Mills | Indiabulls Real Estate | Housing Development and Infrastructure | Aban Offshore | ABG Shipyard |

In an interview with CNBC-TV18, Technical Analyst Ashwani Gujral spoke about his reading on the markets.

Here is a verbatim transcript of an exclusive interview with Ashwani Gujral on CNBC-TV18. Also watch the accompanying video.

Q: What is your cal on the near term? If we did get a pullback, how would you approach it from a trading perspective?

A: All pullbacks below 4775 towards 4800 need to be sold into. The first futures buying signal comes once this market is able to sustain above 4800. Yesterday, the US came back from the lows but that's very typical actions. Once you face selling for two days, the markets tend to have some short covering but the selling again resumes on the third day.

Hence, this is not much of a consolation. We should be headed lower towards 4640. You will have a 50-60 point pullback but it's unlikely that we are going to see a major reversal. We have to test the 200 day moving average (DMA) and then take it from there.

Q: The stocks which got hammered over the last couple of days are the infra names, when you look at the charts of JP Associates , Lanco , GMR , what do you sense?

A: They have broken down. Rs 440 was a good support for many days and now it could rush towards Rs 115-110 which used to be a prior support fairly quickly.

GMR broke down from level of Rs 60 and next support could come at about Rs 45 and also Lanco, support now comes at about Rs 32-35. Hence, these stocks, after being in a range they have pierced through the lower end of their ranges as the Nifty did that. Since they are outperforming on the downside they are likely to hit lower levels before the Nifty does.

Q: As hard hit are the metal counter, what do you see on those charts?

A: Metals are also showing bearish head and shoulder type patterns something like a JSW Steel that can really fall a couple of hundred because metals had a huge run. Whatever had a big run, it is now likely to fall and it will find resistance around Rs 1050. TISCO at Rs 490-95 seems like a possibility. Hence, all the stock which had big runs will now get into trouble. So people should stay away at least from Infrastructure and metals.

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Q: Have the charts broken down for sugar stocks as well?

A: Yes, for Bajaj Hindusthan , Rs 185 -190 used to hold up as a fairly major support but that's broken down. So now Bajaj Seems to be heading towards Rs 145-150, Rs 110 is extremely crucial for Balrampur Chini . If that level goes, we could look at Rs 75-80 and people may say that sugar prices are at all time high. However, stocks generally tend to start corrections when the news is the best. Good news will not tend to impact auto stocks and sugar. Commodities in general, oil and metals and even to some extent sugar is looking down now.

Q: Two real estate chart checks, IndiaBulls Real Estate and HDIL ?

A: Rs 175-180 for IndiaBulls real estate is good support here and it's now broken below that. Hence, Rs 145-150 is the next level there, Rs 300 was the key level for HDIL and it's probably stopped there if Rs 300 gets taken out. I think we will see levels of Rs 260-265, real estate also seems to be in a fresh downtrend so there is no stopping still out there.

Q: What about Aban ?

A: The range used to be about Rs 1050 to about Rs 1500 but this time it turned from Rs 1250. Hence, Rs 1050 becomes extremely crucial. Incase those levels get taken out, it could loose 150-200 really quickly.

Q: Would you bet on some of the midcaps trying to claw back while the FII are away this Saturday and if yes then which ones looked like they could rebound a bit?

A: This seems to be a Diwali day type of opening when it opens in great enthusiasm but by end of the day you see profit booking because people don't know what will happen by Monday. Hence, trading pullback in such markets is not a very sensible thing to do but if you want to do it probably, HDIL Rs 300 is good support and it seems to have bounced back from there keep a five point kind of stoploss and try to ride it up Rs 20 from here. Shipyard companies are strong.

Hence, these are the kind of stocks that would ride up on the upside probably Rs 335 on something like an ABG Shipyard . By the end of the day, your long trade needs to be out because unless we are able to cross 4800 all these pullbacks it will go nowhere.