Don't short Nifty at 5700; bet on pharma, power: Experts

With the Nifty just about holding at 5,700, Sudarshan Sukhani of s2analytics.com maintains a positive bias on the market even if the price action was disappointing.

Speaking to CNBC-TV18, SP Tulsian of sptulsian.com advises investors not to go short on the Nifty. He adds that relief from the CERC could boost the power sector, PSU banks and power-finance companies. With earnings season, a big trigger for the market, around the corner Dipan Mehta, member, BSE and NSE expects disappointment from the IT sector, especially some of the mid-cap stocks, due to a weak quarter and absence of significant benefits gained from the currency movement. Below is an edited transcript of the analyses on CNBC-TV18 Benchmark indices tumbled on Wednesday, as bears targeted large caps across the board. Renewed speculation about early general elections, a dismal services PMI (Purchasing Managers Index) reading for March, and absence of institutional buying support aggravated the fall in the last hour of trade. The BSE Sensex ended the day at 18,801.64, down 239.31 points over its previous close. The Nifty fell 75.20 points to close at 5,672. With this fall, indices have more than given up the gains of the last two sessions. On the Nifty just about holding at 5,700, Sudarshan Sukhani of s2analytics.com says he maintains a positive bias even if the price action was disappointing. "Stop losses for the Nifty position trader for the short term trades are still at 5,630. Tomorrow, perhaps these levels may be revised and the bias would also be modified. Today, I think we will just have to assume that this is one of those days when the market is offtrack." SP Tulsian of sptulsian.com advises investors not to go short on the Nifty at the 5700-mark. "The fall may be due to profit-booking and lack of participation that occurs after a reasonable run-up seen during the past few days. Once there is some relief from the Central Electricity Regulatory Commission (CERC) for Adani or Reliance Power, it will have a positive effect on other stocks especially the PSU banks or dedicated power finance institutions like Rural Electrification Corporation (REC) and Power Finance Corporation (PFC)." Tech Mahindra  and Mahindra Satyam were under pressure fir past few trading sessions and the earnings of both companies are not expected to be equal to or higher than previous earnings. "IT stocks are starting to witness profit booking and exit of huge positions after being strong defensives," says Tulsian. Tulsian does not share the market euphoria regarding Reliance Power's receipt of Rs 2,500 crore as the first tranche of loan for the Sasan project. "I don't think that is anything to talk home about because the project cost is close to Rs 20,000 crore. Of this, the company received about Rs 2,000 crore for completion of 20 percent of the project. But since market view all developments positively, investors can expect an upside of 2-3 percent." MOIL gained 2-3 percent after being down by 40 percent of its divestment price. The management explains that the increase in the stock was due to a surge in international prices and stronger steel demand. Tulsian opines, "I do not think that the domestic demand for steel is strong. So the hike could have been due to 50-percent market-share held by the PSU. Investors should look to exit from this stock." With earnings season, a big trigger for the market, around the corner Dipan Mehta, member, BSE and NSE expects disappointment from the IT sector, especially some of the mid-cap IT shares, due to a weak quarter and absence of significant benefits gained from the currency movement. "Add to this the cyclicals and the interest-rate sensitive stocks like auto, cement and a few capital-goods manufacturers. But a lot of the negative performance has already been factored in by the market. I don't think negative earnings to dramatically impact stock prices." Mehta focuses on the pharmaceutical segment to deliver better results and higher share-prices. "Consumer-oriented stocks and a few private sector banks with secular growth should deliver results that are more or less in line," he adds. "On the whole it is difficult to visualise that the earning season per se could act as a trigger for the market to reverse its decline witnessed over the past 2-to-3 weeks." Mehta highlights that a cut in interest rates could be another key trigger for the markets as it would improve the sentiment of the market and the economy as a whole.