Nifty may fall 100 points beyond 5850; pick ONGC: Darashaw

Looking at the current market trend, Regan F Homavazir of Darashaw told CNBC-TV18 that Nifty may fall 100 points if it breaks 5,850. "We will be looking at a corrective decline only post 5,850. Nifty may be losing 100 points very shortly if 5,850 is broken decisively," he added. Moreover, signs of a sustainable bull market can be witnessed only when the NSE benchmark crosses 6300, he opined.

As far as the oil and gas space is concerned, his top picks include ONGC, BPCL and RIL. He holds a medium term target of Rs 550 per share on ONGC shares and according to him, Reliance could move up to Rs 1200 per share post consolidation. "As far as Reliance is concerned, it is a bottom fishing candidate. Reliance hasn't moved in these many years. So, this underperformance seems to be ending in Reliance and we are expecting it to move higher. In a best case scenario, Reliance is expected to go up to Rs 1200," explained Homavazir.
Among the smaller banks Homavazir is in favour of Karur Vysya Bank. But, banks like HDFC Bank and State Bank of India also has limited downsides, he noted. He also remains positive on Hindustan Unilever post the recent correction and sees consolidation ahead. In the consumer space, he chooses stocks like Emami and Pidilite.
From the infrastructure segment, Homavazir is positive about Jaiprakash Associates and Reliance Infrastructure. According to him, the corrections in this sector are almost over and selective stocks can provide reasonable upside. Here is the edited transcript of the interview on CNBC-TV18. Q: We had a difficult three weeks and yesterday there were some signs of a recovery, how are you calling it for the Nifty now?
A: Where the Nifty has turned from is something very critical. It has moved from 6,300 and 6,100 seems to be the barrier. It is suggestive of the fact that only post 6,300 we are again going to start looking at a bull market and a sustainable one. As far as the extent of the correction is concerned, we will be looking at a corrective decline only post 5,850. We will be losing 100 Nifty points very shortly if 5,850 is broken decisively.
If one looks at the macro picture, stocks have corrected quite a bit but the Nifty does not seem to show that picture. So, 5,850 is the trigger point for many corrections to unfold. Q: What about oil and gas, that has been the talking point, how do you see stocks like Reliance Industries and Oil and Natural Gas Corporation (ONGC) doing from here?
A: In the oil and gas space, we have top three stocks including ONGC, Bharat Petroleum Corporation Limited (BPCL) and Reliance Industries. ONGC seems to have some very strong barrier around Rs 360. Should we move past that, the trend starts to accelerate upwards, in which case the stock could move as high as Rs 550.
As far as Reliance is concerned, it is a bottom fishing candidate. Reliance hasn't moved in these many years. So, this underperformance seems to be ending in Reliance and we are expecting it to move higher. In a best case scenario, Reliance is expected to go up to Rs 1200.
BPCL on the other hand seems to be in a phase where it is likely to embark on a bull trend in which case it could go as high as Rs 460 initially and then it could move up to Rs 600. Q: What about the banks, how do they look technically?
A: The banks are looking fine. As far as Housing Development Finance Corporation (HDFC), HDFC Bank is concerned, they are looking fine. They have certainly reacted from a key resistance area but their downsides are limited up to 10 percent and the long-term targets still remain at Rs 1,000 each.
As far as State Bank of India (SBI) is concerned, it could come down to as low as Rs 2,000. That is not what we are expecting but, the charts are suggestive of Rs 2,000. In a best case scenario, should we move past Rs 2,500 the trend starts to accelerate in SBI. We are very confident of Karur Vysya Bank because Karur Vysya Bank seems to be the top pick for us in the year and we expect it to reach a target of close to Rs 800.
_PAGEBREAK_ Q: The space that has been letting the market down at par with the earnings disappointment is the fast-moving consumer goods (FMCG) basket. What do you see over there, some flat lining or downside risk to faces like Hindustan Unilever and ITC?
A: We are positive on Unilever, at where it stands now. The correction in Unilever was supposed to happen and it seems to have gotten over. We believe that Hindustan Unilever Limited (HUL) is going to consolidate at these particular levels and then start moving higher. We are expecting Hindustan Unilever to get back to Rs 600.
As far as other stocks are concerned, Emami seems to be the star performer in this pack because Emami is showing signs of going as high as Rs 800 very shortly and Pidilite which is one of our top picks is likely to be a wealth creator. We expect it to move to Rs 500 from where it stands. Q: Infrastructure has had a big problem in these last three weeks and has probably been one of the biggest losers. From here, would you say, they are for a bounce or did it look like a break down?
A: In infrastructure space there are selective companies that look very good and the correction seems to have had gotten over. For example, JP Associates has fallen from about Rs 103 or Rs 107 to about Rs 70. We expect JP Associates to do very well.
We also do not expect too much downside in Reliance Infrastructure. The trigger point in Reliance Infra would be Rs 570 where we expect some serious upside.