Will look to sell banks on every rise now, says Anu Jain

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Will look to sell banks on every rise now, says Anu Jain

It is best to concentrate on stong stocks such as Auto or Energy in a weak market than on banks, which are probably the weakest, says Anu Jain of IIFL. In a discussion with CNBC-TV18, she said that technical charts reveal that Friday's pullback of the Nifty might not last and the long-tem bias is downwards.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Nifty trades lower amid volatility; banks, autos down Nifty may correct up to 5494-5437: Angel Nilesh Shah's best bets for long term returns Market holds ground: Is it best to offload stocks now? Market tumbles: How to approach it now? ALSO READ See previous views by Anu Jain See what other Experts & Brokerages are saying about Axis Bank See messages about Axis Bank Axis Bank BSE | NSE 29/05/12 Are Mutual Funds betting on Axis Bank? Other Stocks in this news State Bank of India | Bharat Petroleum Corporation | Hindustan Petroleum Corporation | Indian Oil Corporation | Apollo Tyres | WABCO India | Ashok Leyland | Hero Motocorp | Tata Motors | Mahindra and Mahindra |

After nine sessions of trading down, the Nifty was seen opening higher today as global cues turned positive boosting investor confidence. As the market looks towards a revival, some experts feel the pattern that's emerging might not hold for too long and that the market is still very weak.

Anu Jain, Vice President, IIFL Private Wealth Management, talks to CNBC-TV18, on what she sees of the Nifty and makes her picks in the market. The volatility is a difficult phase not only for investors but also for traders, she says, adding that the bias, however, is definitely going to be downwards. Bet on the strongest stock in the current scenario than on the weakest, she advises.

Below is the verbatim transcript. Also watch the accompanying video.

Q: Was there enough juice in Friday's pullback rally for the Nifty to move higher?

A: It was long overdue after nine sessions of being down and the market not really showing any kind of resilience at any level. 5450 finally showed to be support which was respected. So, having respected 5450, I think the logical target for the first one was 5550 where it really closed. The next one seems to be closer to 5620. Intraday, I think, 5520-5572 would be a range. SGX is suggesting that opens closer to 5572, would have to see whether it can kind of sustain the selling out there. If it does, then, there are definitely another 50-70 points on the cards, but higher levels would attract more selling. This is a pattern which is getting more and more pronounced to be on a longish period, slightly more negative.

See what other experts are saying. Nifty has resistance at 5625.

Q: Which stocks will you play the pullback rally through? I mean, till last week, the big gainers have been the oil marketing companies and may be a couple of capital good stocks?

A: Essentially, if you are trying to play strength even in a weak market, I would honestly not play into banks, which are probably the weakest and would obviously do a short covering kind of move that will be fast and furious, but they will get sold back into it. So I would, in fact, look for opportunities to sell on rises on any of the banks, where Axis is looking very weak or probably State Bank on a high. But for buying, I would still concentrate where I am seeing strength even in this market. So if I were to really look, for obvious reasons, BPCL , HPCL and IOC are showing strength. Of that, BPCL seems to be the strongest. I would probably look at that with a stop loss closer to about 1-1.5% from here, for a target which is as high as Rs 720. So if I had to play, I would play strength for that reason. Apollo Tyres is looking good too. In this market, I would probably bet on the strongest stock rather than the weakest.

Q: Would you create long positions if the market does start 30-40 points higher or would you wait for shorting opportunities at higher levels? What is the best way to approach trade now?

A: The fact of the matter remains, if you are going to open gap up, there is hardly anything left on the table for somebody who is close to the resistance level. So, 5620, if you look on the charts, is your 200 day EMA and between that and 5676, there is enough resistance. So, to go long doesn't seem to be the logical technical play right now. In fact it would be the latter that we would look for opportunities to short. So probably an Axis Bank, which is closer to resistance at about a percent higher, if it is opening 1-1.5% higher, then you look for opportunities to see if there is selling coming into the counter and then probably you will go short. Banking continues to remain weak. So you are looking for opportunities for a pullback to go short into it.

Wouldn't go long if it opens a gap of even half a percent to 40 points, because it has already done something on Friday and it could probably stay positive today. But tomorrow is another story. In fact, most of the days if you see, if it is going to open a gap up or gap down, carrying a position becomes difficult and taking a position also becomes difficult. So, this is going to be an extremely challenging period, not just for investors, but for traders as well. But I think the bias is going to be definitely downward.

Q: Which of the auto charts look the best to you from the ones which have got beaten down like TVS Motors , Leyland , Hero Honda , Tata Motors ?

A: Essentially, if you were really to look at strength, then probably, one would look at M&M coming back sharply, or even Tata Motors, because these have not really broken down badly. If you look at the Ashok Leyland chart, it is quite scary to have a 45% correction from January to now and there is really no recovery to talk about. I would probably say that if one were to look at them, Tata Motors at lower levels would make sense of a pullback which is far sharper. That stock has a tendency to also move up faster.

Where it is closer to the Rs 1200, the support is actually now at Rs 1162. If it manages to hold on to Rs 1208, which is the first move that you will probably see that there is strength coming to the counter. But otherwise, the market could pull it back and I would look at levels closer to Rs 1160-1170 to start cherry-picking the stock. As of now, I wouldn't do it.