See close above 5150 as sign of strength: Anu Jain

“If there is any breakdown from here, the next support is only at 4,950,” she said in an interview to CNBC-TV18. Therefore, given the RBI policy meet tomorrow, she says it a close above 5150 is crucial in determining the market’s next move.

“If one can hold on to 5,150, then towards the closing one may see a lot of short covering. Otherwise, people are going to be tentative throughout the day,” she explained.

With this view, Jain is positive on the midcap IT space, and says FMCG, pharma and cement names will do well. However, she is negative on the high beta space, mainly public sector banks and infrastructure companies.

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

Q: How are you going to approach the Nifty this week?

A: The fact remains that we are holding on to 5100 by the skin of the teeth. That level is close to the 50 day moving average and the 200 day moving average, so if there is any breakdown from here, the next support is only at 4,950. For the market to show that it can hold on and move ahead, a close of 5,150 is crucial. We did test that on Friday, we got the gap up but we gave up. We are getting a second chance today, so it is going to be pretty crucial.

If one can hold on to 5,150, given that there is a policy decision tomorrow, then towards the closing one may see a lot of short covering, especially in the weaker counters like public sector banks and in infrastructure. Otherwise, people are going to be tentative throughout the day. It makes sense to take up positions towards closing if the Nifty holds on to 5,150.

The stalwarts which are the sectors which have held in strength, whether it’s FMCG, pharmaceutical or cement will continue to see positive bias. I think where one will see a change irrespective of the market is probably CNX IT; it may show some kind of resilience, if not strength, especially in the midcap IT. So one may see a positive bias coming in there.

Q: From the cement space, which names would you go long on now?

A: The way the market closed on Friday, can have a look at Ultratech which is looking good for another 4-5%. In the midcap space, Shree Cement , which closed around Rs 3,050, look good for Rs 3,175. Ultratech is looking good for about Rs 1,760. So both of them are giving another 4-5% upside still visible.

One may see some kind of movement coming even in ACC , but if I had to take a pick in the largecap then it’s Ultratech and in the midcap it would be Shree Cement.

Q: You have a buy on IndusInd Bank today?

A: Towards the end of the day one may see some pickup in banking, and it’s safe to pickup a private bank right now. IndusInd Bank is one stock where results have been decent and we have always seen it remain in a safe trajectory. So at Rs 327, any during the day to Rs 320 could be looked as an opportunity to get in. The immediate targets are closer to Rs 350.

Risky players can even look at PSU banks like Bank of Baroda (BoB) and Punjab National Bank (PNB) about 1-1.5% from here, but IndusInd is a safer bet at this moment.

Q: Mahindra Satyam looks attractive technically?

A: I have been bullish on the stock since it was at Rs 68-69. It has given a fresh breakout again on the way it closed on Friday and probably prices are reflecting the news which has come out today.

As long as it holds on to Rs 82 from where it has broken out, I think you are poised towards Rs 91 level. It looks good to pickup on every dip even for a longer perspective. So as an investment stock also we are looking at buying it for a longer period. But just to play the short-term 5-10%, I think as long as it’s holding Rs 82 it is definitely into a breakout zone.