See Nifty at 7500 if 6300 breached decisively: Darashaw

In an interview to CNBC-TV18, Regan F Homavazir of Darashaw said that he expects Nifty to touch to 6,300 by March. He also believes that if Nifty reaches 6300 decisively, it might further rise to 7500. In the current rally he also expects mid cap and small cap to participate.

Below is the edited transcript of his interview to CNBC-TV18 Also read: Nifty may inch towards 6,200 in Jan: Traders Q: A word on how the market is moving today and whether you see the signs technically breaking out from the range it has been for so many weeks? A: First and foremost let me put it that we are in a bull market. We are expecting that we will test 6,300 immediately. It would be a thing to watch that whether at 6,300 we are taking the residual selling pressure that 2008 and 2010 has to offer. Post that we are expecting the Nifty to go up to 7,500. It is important to state that earlier this rally from 5,000 onwards to where we stand at the moment has been led by few stocks. Now the mid-caps and small-caps also are participative of this rally. We expect the mid-caps and the small-caps to move as well. It appears that we will move past 6,300 shortly. Q: How soon do you think the move may happen and what is it going to be? It is going to be a one-off move for the market technically after which there is a retracement or do you see this strength extending through the year of 2013? A: We are expecting 6,300 by March. If you extrapolate normal ratios, Fibonacci ratios – we expect 7,500 to come. However, 6,300 looks more likely by March. Q: What about the Bank Nifty? Some of your peers have pointed out that it looks a bit dodgy after the big run we saw last year. Is the propellant for the Nifty is still the Bank Nifty? A: It appears so because the Bank Nifty and the banking stocks both look very positive. If you look at the public sector undertakings (PSU) space – the PSU space looks as if it is going to double. It is likely to move up a 100 percent. For the front liners it is important to look at State Bank of India (SBI), the way it moves. For SBI, Rs 2,500 mark has been critical for quite a while. It has been nearly a year that it hasn’t been able to move, past that level in any appreciable manner. We are expecting SBI to at least go to Rs 3,500 and test its all-time high. One can also look at a stock like Punjab National Bank (PNB). It appears to finish its bottoming process and looks like it is heading to Rs 1,400. One can also look at Union Bank, which looks the best in its pack. We are holding Union Bank for a target of Rs 450 and Rs 700. So as far as the PSUs are concerned this would be our top bets. In the mid-caps we are looking at Karur Vysya Bank very closely. We expect Karur Vysya Bank to be a wealth creator. On it our first target would be Rs 800 and secondary would be Rs 1,000. _PAGEBREAK_ Q: You have actually got a lot of interesting mid-cap picks for this year and that’s the revolution of last year, the way the mid-caps performed – Pidilite is one of them. What kind of targets do you have there? A: We expect Pidilite to go upto Rs 500. All mid-cap stocks that we have identified – we have identified on two grounds. Firstly, whether that trend is a primary trend – meaning are they in the bull market primarily. So, Pidilite falls in that category where it is likely to be a wealth creator. It could go upto Rs 500. We also expect Bajaj Holdings & Investments, which we have been talking for a while since Rs 850. We expect our first target to be Rs 1,800. We wouldn’t be surprised if the stock is trading well over Rs 4,000 in the many years to come. Also, we are looking at Emami. Emami is something that we expect Rs 800 our first target and Rs 1,100 is our second target. Importantly, the new entrant in our list of mid-caps has been Indiabulls Financial Services. Looking at the charts it appears that the entire corrective process and the consolidation process which was under way is now over. We are expecting it to move to Rs 650. Q: To switch back to the heavyweights for a bit. Metals started moving in December and you guys have a call on Hindalco. You like the way that’s shaping up? A: Yes, Hindalco I think is one of the best performing stocks in the metal pack from now onwards. We expect its price target of well over Rs 200. If one looks at it from a trading perspective Rs 160 is given. However, if you look at it more from a macro investment perspective you could be expecting well over Rs 200. The metal index per se has finished its price correction. We have no control over the time element. The time element could be well over 3-4 months before it actually starts to establish in its trend.  Hindalco seems to finish its consolidation. Similarly, JSW Steel is also looking very good. It looks Rs 1,200 could come. Q: To switch back to the market itself what kind of downside risk would you say is present on the Nifty right now. If your targets on the top are moving higher what’s the base or the new base for the Nifty? A: There are two levels we should be very glued on to. The first one is 5,750 and the next one is 5,500. 5,750 should it break below then there will be concerns over the longer term target. However while this 5,750 and 5,500 should they come it would only present a buying opportunity. Most stocks haven’t moved in the market. Only the financial pack has moved so far. So, that would be the opportunity to grab onto these financial stocks. Q: So if your call is that the market is headed to 6,300 would you put that out as positional advice as well for someone playing the January series, go long on the Nifty? A: Yes, we would look at a long position on the Nifty.