5600 decent support for Nifty, says Sandeep Shenoy

The level of 5,600 on the Nifty is a decent support for medium as well as the long-term says, Sandeep Shenoy, Executive Director, Institutional Equities, Anand Rathi Financial Services in an interview to CNBC-TV18.

Now, since we have come out of annual earnings season and moving to the first quarter, there could be volatility in the market, he adds. "We belong to the camp which says that market could have bottomed out on a medium term as well as longer term basis but that doesn’t mean that there is going to be a sudden sharp rally, you could be in for a prolonged period of sideways movement," he states. On Friday, both the Nifty, and Sensex surged almost 3 percent each. The Sensex gained ended the day at 19395.81, while the Nifty closed at 5,842. The rupee also recovered and regained the 59 level versus the dollar. Commenting on metal stocks, he says the preference would be Tata Steel, JSW Steel and then Jindal Steel & Power. JSPL could be a traders' delight for the next few quarter On the banking license front, he would bet on L&T Finance Holdings and Bajaj Finserv as main contenders but purely on speculative basis, he adds. Also read: Japan mkt looks promising; risk appetite back: UniCredit Below is the verbatim transcript of his interview on CNBC-TV18 Q: What did you make of that gas price hike and how would you approach these two names now Reliance Industries and Oil and Natural Gas Corporation (ONGC)? A: We don’t officially cover these stocks. But looking at the way the policymakers are now panning out things for the sector, I think somewhere or the other it could be beneficial. But the degree of the benefits accruing to the bottom-line of these companies was too much of a knee-jerk reaction, in the early part of the today’s trading session. So, on a longer term basis there will be one set of companies and maybe one sector, which could be a beneficiary. Whereas the other set of the sector could be at the receiving end, which could be the power generation and maybe fertiliser companies. However, as of date the early morning reaction of the stock may have been a bit on the preemptive or you can say over expectation side. So somewhere the gains have to go and that is where it is going. Q: What would you assume in terms of a trend for the markets considering that we now see two clear days of a run on the Nifty along with appreciation on the rupee as well? A: Some amounts of technical factors were also in play. You just had a closure of a session and the markets really getting ravaged over the last few days. We have been always maintaining that 5,600 is going to be a decent support for the market on the Nifty front for medium term, as well as the long term basis. There could be an overshoot or undershoot by a couple of percentage points, which is given. Having said that, more or less, we have come out of the annual earnings season and we are moving to the first quarter. This is where we feel some kind of volatility could be there. However, on a longer term basis, we belong to the camp which says that market could have bottomed out on a medium term as well as longer term basis but that doesn’t mean that there is going to be a sudden sharp rally, you could be in for a prolonged period of sideways movement and we are seeing the first phase of that. Q: The metal pocket has been hit the hardest in this is month gone by. Would you put money in any of these metal names or do you think it is just purely a relief rally that some of these names like Jindal Steel and Power (JSPL) has seen? A: JSPL on business model front probably has one of the strongest domestic oriented business models in India right now. However, the overhang of coal and coal mines is going to be looming large on this company for many more quarters. It is going to be a trader's delight for the next few quarters. It has got a huge amount of capex but that capex is also now under a question mark. However, having said that it is still one of the better capitalised company's in India right now and it is not going to require any capital infusion. Other than that the only other two worthwhile stocks which merit a look would be Tata Steel which is generally a larger international company with an India arm attached to it. It has its own set of problem. The last but not the least would be JSW Steel. The preference would be Tata Steel, JSW Steel and JSPL in that order. Q: A lot of these banking license aspirants are scrambling to meet that July 1, deadline, which is on Monday. But in your mind, ahead of the event or rather keeping in mind the number of companies that are applying, which are the ones that you think are the strongest contenders and where you would put your money into now? A: It is becoming a play of probability right now. I am trying to take a preemptive call. But if you look at it and you shift it out and try to come on a cleanliness basis it is my personal belief, not necessarily my organisational belief that L&T Finance Holdings and Bajaj Finserv could be the main contenders for these licenses. So, I would plunk my bet on them on a pure speculative basis.