Oil & gas to be biggest drag if Nifty drifts to 4430: BRICS

Even as the situation around the world slowly gains support, investors in India will have to play the wait-and-watch game to see if there is a potential pullback on the last day of trade for 2011.

Abhijit Paul of Brics Securities talks to CNBC-TV18 about the fundamentals of trading and how he sees the Nifty playout by day end. Below is an edited transcript. Watch the accompanying video for more. Q: On the series itself, how would you call January? What kind of expectation would you have on the index?
A: We had a weakish expiry yesterday. The Nifty is still struggling to move into a short-term uptrend. Every time it has bounced back 5-6% there is ample amount of selling coming in. In terms of the underlying trend, we are in a downtrend and the likelihood of a drifting down is much more.
From a short-term point of view, as long as 4,750 is not taken out on the upside, I sense selling is much likely to stay. On the downside the obvious level is the previous swing low of 4,500-4,530. Q: We were expecting this to be a slow week but if you look at the internals, influential sectors like banks, oil and gas index have lost close to 3.5% this week. Specifically on oil and gas, what are you seeing on the charts for the likes of RIL and ONGC getting into the next series?
A: Oil and gas is particularly looking quite scary. We see that oil and gas indices have given a classic breakdown be it the erstwhile stronger stock like Cairn which was holding well to the weak ones like ONGC or RIL. They are all back to a downtrend across all timeframes. From hereon let us say a month or a quarter if Nifty drifts further down, I am looking at immediate test close to 4400-4430 mark then I sense that oil and gas will be the biggest drag. Q: What about the Bank Nifty what kind of downside risk do you see there?
A: Banks per se have a pretty high weightage on the Nifty but still there is lack of clarity in terms of where this downtrend is likely to find some support. Bank Nifty and most of the banks are in a downtrend. In fact stocks like Axis Bank and Yes Bank are the ones which have seen a fresh bout of selling.
Overall, I sense that over a quarter