Nifty to touch 5,700 in Apr; bet on cement, pharma: Experts

Market analyst SP Tulsian of sptulsian.com forecasts the Nifty to touch 5,700 in the April series while Dhirendra Tiwari of Antique Institutional Equities advises investors to bet on cement and pharmaceutical sectors, in an interview to CNBC-TV18.

Sudarshan Sukhani of s2analytics.com says that the fall in the market was not too adverse on investments and adds that the market is caught in a downtrend.

Below is the edited transcript of the analyses on CNBC-TV18

Benchmark indices nosedived after a firm start to close at a near seven-month low Tuesday, as the market prepares for what is likely to be a disappointing earnings season. The Sensex closed at 18, 226, down 211.30 points over the previous close after touching a high of 18,565.56 intra-day. The Nifty closed at 5,495, down 47.85 points.

Sudarshan Sukhani of s2analytics.com says the complete reversal in trade was expected as investors started to buy in a bear market. "In the morning markets went up and on significant selling traders were stopped out. I do not think traders actually lost a lot of money. There was buying at lows seen at the opening price and with a 5,535 as stop loss. The market went down because it is caught in a downtrend," he told CNBC-TV18.

The all-party meet to discuss the Land Acquisition Bill was inconclusive and has been postponed to April 18. SP Tulsian of sptulsian.com says the news nullified the impact of the day’s profits and caused the market to close negative. "The fall in the bourses over the last three-to-four days indicates a lack of FII participation."

Tulsian expects the market to move up after the announcement of Infosys earnings on Friday. "Overall, a cautious stance is being maintained due to lack of confidence, buying, small selling by the overseas investors and weak trends prevailing in the market."

Cairn India announced a new oil discovery at its Rajasthan block. On the stock suffering  a beating at the bourses, Tulsian says that the stock seems to have bottomed out. "In fact after the Budget, nothing negative trend has been observed in the stock. The company has been ramping up its crude oil production, which is currently at 175,000 barrels per day."  The market analyst is positive on the stock which is under-owned. "Investors exited the stock which corrected from the Rs 320-325 levels. So maybe the Cairn India seems to have bottomed out. It is likely to move back to the Rs 315 levels in this series itself."

Tulsian's calls during the last hour of trading plans include going short on Wipro due to aggravation weakness in the stock since morning. “So investors can go short at the current level of Rs 393-393.50 and look for a target of Rs 388.”

Tulsian indicates that the course of the April series hinges on the earnings of four sectors- IT, automobile, cement and banking and finance. "The results of the banking and finance sector which are to be announced at the fag end of the series probably may not be able to impact the April series."

"However, IT will probably drive the market and could keep market sentiment a bit negative. I am positive on cement earnings. Automobile earnings will negative though Maruti Suzuki and Mahindra & Mahindra (M&M) may buck the trend," he says.

In a conclusion of an estimate of the series, the market analyst adds, "I do not expect the Nifty to fall below 5,450. There maybe a probable fall of 70-75 points. But expect the Nifty to move up by 150 points to reach a level of 5,700. Investors can take a range of 5,450 on the bottom and maybe 5650 - 5700 on the upside. That should be the range for remaining part of April series."

Sugar stocks witnessed a dent after moving up on the government's decision to remove the levy. "When the stocks moved up by 6-10 percent, I advised investors to exit, " emphasises Tulsian. "The next trigger is the submission of tenders for ethanol with the oil marketing companies and the stocks could rise by Rs 38-42."

The market analyst says that the acceptance of the tenders will be more significant than the scrapping of the levy where all the mills have stood to gain by about Re 1 per kg. "In fact, the upside has started to get factored into the price. With no further reforms lined up, the upside is likely to be limited and the results are expected to be subdued and weak, at least from the UP-based sugar stocks. Any further correction of 5-to-8 percent may cause the stocks to stabilise and witness renewed buying interest.”

A brokerage report revealed that Educomp could report losses at the operating level due  to its Smartclass model. "The company has been plagued by all kinds of problems in the past. So the market is very cautious. In all likelihood, Educomp stock could correct to about Rs 50 in next one week or so.”

Advising investors on the private banking ahead of the announcement of earnings by the sector, "I don’t see any kind of concern. I expect Axis Bank and YES Bank to perform the best in the private-sector segment.”

On Thursday, the United Spirits open offer is scheduled to begin. "I don’t think that it has any relevance and the open offer at Rs 1,440 rules out participation by retail investors. FIIs and overseas investors holding 48-50 percent stake in the company will not participate because they have been quite bullish on the stock and the sector already. Honestly, I don’t know who the true beneficiaries of the 48-50-percent stake are. Not a single share will come to the public in the open offer. It is will just be a statutory compliance."

Infosys has been under considerable pressure and today it fell to a two-month low. "Ahead of its results, Infosys has always been very volatile. Overall, a sense of caution prevails and I won’t be surprised to see the share correcting to Rs 2,600 by the time results are announced on Friday."

Dhirendra Tiwari of Antique Institutional Equities advises investors to build positions in certain stocks. "In pharma sector, our favourites comprise Sun Pharma and Lupin. Our IT sector bets are led by Infosys and Tech Mahindra. We also  prefer certain consumer monopolies like ITC and Nestle. In the NBFC space Shriram Transport attracts our attention.”