Auto, pharma to take lead if market goes up: Vishal Malkan

In an interview to CNBC-TV18, Vishal B Malkan, technical analyst at malkansview.com, bets on good results from the banking sector and picks Kotak Bank as a top performer. Malkan also thinks that the auto and pharma sector has to take a lead if the market has to go up.

Further, he suggests TCS as a good buy saying, "I would take dips to buy TCS because as the charts suggest, it is going up and it is making higher tops and higher bottoms." Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video. Q: I will ask you about the banks first because those were the big movers on Friday. Would you continue to go long on the Axis Bank stock?
A: Axis Bank has been trading within a range of Rs 1,080 and Rs 1,200. I think it’s at the lower part of the range, plus results(banking sector) are expected to be good just like yesterday. I think it should hold the support and move upwards around Rs 1,150 levels in the coming days. Q: Do you have any other picks from the banking space because overall the numbers that have come out, at least from the private banks, have been on the positive side. Fundamentally things are improving but, technically do you have any more picks in the private banking lot?
A: I would say Kotak Bank would be a better bet than any other bank because that's showing some strength in last few months. Resistance of around Rs 600 is there. Once it breaches that, it can go up to Rs 650 levels. It has a strong support around Rs 560 and is relatively outperforming in the banking sector along with HDFC Bank. So, these two banks are better bets in the banking sector. Q: How do you approach trading on the index now, in terms of what kind of range a trader should work with? Yesterday, for the first time in many days there was action around the 4900 mark. Equally volatility has been easing off a lot in this market.
A: After a dream run in January-February, it's been horrible for traders in March and April. It is going absolutely sideways, breaking any side is like a guess for anybody. If it breaks 5150 on a closing basis, then only we can see some level around 4950-5000. As of now, my guess is that it should hold a support and move upwards. Q: Aside from banks, what do you think will support the market if it has to make a journey upwards because there hasn’t been that much visible leadership from any other sector?
A: I think autos are showing some kind of leadership where Tata Motors, Apollo Tyres, Bajaj Auto, Hero Honda and Maruti is showing some strength. Tata Motors is the strongest of all and should take the lead. Even pharma sector looks good with Ranbaxy, Dr Reddy, Sun Pharma. I think these two sectors should take the lead if market has to go up. Q: The big mover all of last week was TCS. It has moved about 10% or so. Would you use that rally to short into the stock or would you add some more positions if you had then?
A: Infosys and Wipro are moving down whereas TCS and HCL Tech are going up. So I would go stock specific. I would not like to short something which is going up. If I have to short, I will short Infosys which is quite weaker on the charts compared to TCS. I would take dips to buy TCS because as the charts suggest, it is going up and it is making higher tops and higher bottoms. Q: Going into the next week - how would you approach infrastructure - the space that has got hit the most through the last series and indeed the week gone by?
A: Infrastructure has been badly hammered in last few days. I would not like to bottom pick any of them. If at all markets sustain support of 5200 and start moving up, I would like to buy stocks which are strong on the charts. Infrastructure, I would completely avoid. In case the market breaks the support, then infrastructure would be a better bet to short. Q: What about some of these metal names because there has been some pressure that we saw yesterday? Today there is bit of a bounce back. How would you approach some of these metal names like JSPL, SAIL, etc?
A: JSPL, SAIL and Hindalco - all three are at a major support, though Hindalco is one of the weakest out of three. But I would say that JSPL is better than all the other two. I would like to buy on dips to Rs 460 levels and around Rs 525-530 should be a resistance. So it is slightly outperforming the other two counters - SAIL and Hindalco. So Jindal Steel would be a better bet. Q: You like Tata Motors and that one has been a strong performer for a while. What kind of target price would you have on that?
A: Tata Motors is completely outperforming the market and also the sector. It is trading at an all-time high, near the levels of Rs 310. I guess Rs 290 is a very good support and going in the future, maybe couple of months, we can look around targets of Rs 350-360. Q: Ranbaxy from the pharmaceutical space, how about that?
A: My next pick is Ranbaxy which is looking good on the charts. It has broken out on the weekly charts also. I think Rs 490 level is a good support and can reach up to targets of Rs 550-575 in the coming months.
Q: What’s your view on Voltas now?
A: From the mid-caps I have Voltas, which looks decent on the charts and should have a decent move in the coming weeks. The levels to watch out for in Voltas is that it should take support around Rs 105 and in the coming months we can expect a target of around Rs 125-130. Q: You also like Patel Engineering?
A: My next pick from mid-caps is Patel Engineering, which is also having a good support around Rs 100. I guess if it holds Rs 100 on a weekly or monthly basis, it should reach up to targets of around Rs 125-135 in the next couple of months.