Short banks, go long on oil & gas: Edelweiss

In an interview to CNBC-TV18, Atul Badkar of Edelweiss Securities said that post December 31, Nifty has seen a swift 2% move and going forward, it should trade in the range of 6100-6150.

Also read: Mkt trend upwards; buy on dips, don't short sell: Sukhani

He recommendeds some stocks from the oil and gas space. He advised going long on Reliance Industries. For the banking sector, he says, "there is not much upside left across stocks. The space looks a little overbought," The best idea is to go short on Punjab National Bank with a target of Rs 860-855, he say's.

Below is the edited transcript of his interview to CNBC-TV18

Q: What we may see for the rest of the January series which is still quite long?

A: We have a very long January month. Post 31st December, we have seen a very quick move of 2% on the Nifty. Now it is at 6010 levels. It is quite evident on the screen that it is taking more dollars to take the Nifty up higher incrementally. The flows have been fantastic in December. Even in the first two-three trading sessions of January, we have seen more than Rs 2,500 crore of money pouring into the country. So, liquidity is supporting this rally. In our view it will continue supporting it for some more time. However, as we move towards the 6050-6100 mark, it makes sense to take some money off the table. One really wouldn’t want to jump in all out at 6000 and expect market to rally one way to 6300-6400.

There is inherence trend which is very evident. This is why you will probably see 6100-6150 levels. However, one will see pull backs. I think the structure till 5950 is quite gettable. One will change the overall bullish stance on the market only if it goes below 5750 levels. This I think is quite unlikely in the immediate future. Broadly, I think this market in the next few trading sessions, at least till first one or two weeks, should be in the range of 6100-6150.

Q: There was plenty of activity in the oil and gas space. Any picks from that sector?

A: At this level on the market, in the entire oil and gas space it is best to stick with Reliance Industries. In fact, I have given that as a long buy as well. Around Rs 860 levels, this stock has not done too well. It has obviously moved in line with the market. That is why it is good to have a proxy stock to the market rather than going into a high beta name.

So, Reliance Industries at Rs 860-865 on charts, even from the technical indicators, looks like it is heading towards Rs 880-890. Reliance over the next few trading sessions looks like a good four-five percent. That remains a good pick in the oil and gas sector.

Q: At what point would you start taking profits in the PSU banking names?  Which stocks would be on your sell list?

A: Across the banking pack, by and large, there is not much upside left across stocks. One stock that comes (across) as an immediate short is Punjab National Bank (PNB). It is close to around Rs 900 levels. We have seen very brisk and fast moves in the last few trading session. It looks a little overbought. This is why it is the best play to short for a target of around Rs 860-855. So, that is one name that very clearly comes across the short.

State Bank of India, at Rs 2,350 can give a quick two-three percent. It can move till about Rs 2,500. So, by and large, short PNB, stay invested in State Bank of India.