Likely floor for April series at 5800, says Deven Choksey

Markets took a breather after more than a week of rallying. Yesterday, the Nifty closed 6 points lower at 5,885 while the Sensex shed 21 points to shut shop at 19,591. Calling it more of a time correction than a price correction, Deven Choksey, of KR Choksey Shares & Securities said the trend is suggesting change in trader's positions.

"We are still comfortably in the zone of 5700-5600 and unless we have a decisive, upside or downside happening in this area, probably we will not see a kind of major fall into the market," he said adding, "I think 5800 should offer a floor for the April series." Below is verbatim transcript of the interview on CNBC-TV18. Also watch the accompayning video. Q: Do you think this sideways trend in the Nifty can last for a few more days or are you expecting a bigger move for couple of 100 points either way?
A: I call the current sideways trend as more of a time correction than a price correction. The market on an intraday basis is taking some dips and is coming back to its normal level. It is suggesting that traders are shifting their position from time-to-time. In my viewpoint, we are still comfortably in the zone of 5700-5600 and unless we have a decisive upside or downside, happening in this area, probably we will not see a kind of major fall into the market.
However, 50-100 point Nifty movement is definitely possible on the downside. High crude oil price is giving great discomfort to many traders. Earlier, when the view was that it would stabilise somewhere around USD 105 per barrel, I think they were confident of bringing in money. Today, once again, the nervousness has started. To a great extent this factor could probably put some people away from the market for the time being.
Secondly, next week is relatively a short week with only two trading days. So probably you are going to see less action in the market next week. As a result of which we would largely trade in this particular band unless we see some major corrections happening in crude oil prices. I think this trend would most likely continue. Q: How would you approach the two stocks that were under pressure yesterday: Sesa Goa and Cairn India?
A: According to me, given the kind of clarifications coming in, probably Sesa Goa shouldn't remain so much under pressure. The Vedanta Group's clarification suggests Sesa Goa would absorb the offering, and also even if the view of the government or the ministers is not positive on particular deal, they will continue to remain as minority shareholder in the company.
So if you translate Rs 355 per share buyback, 240,000 barrels per day kind of production and extrapolate those numbers - you find that the price at which they are going to buyback with a minority stake, the payback period for them would remain under five years.
Given the fact that if this transaction is not taking place Cairn would continue to enjoy the same benefit of 100% royalty paid by ONGC/government and they will continue to pay 100%.  To a greater extent, the situation doesn't change and Sesa would remain minority shareholder in the company.
In my view point, it makes sense to stay with Sesa because they in any case are not deprived of benefit which otherwise is continuing for Cairn in current times. Q: Do you agree with that assessment that for the April series 5800 might be the low and you could still work with targets of 6000-6100?
A: Yes, I would tend to agree with that to a greater extent. Having bought this money for trading into the market by the FIIs, probably they would not be in hurry to take that money out that is the first rationale. Second rationale is that the crude oil prices generally seen that above USD 120 per barrel is not sustaining and has a tendency to come down and in that situation if it does come down and again settle at around USD 105 per barrel range then possibly you are going to see again the interest reviving back and probably people would put more money.
To a greater extent I think 5800 should offer a floor. In a situation where the market has to go down below 5800, you have a good support between 5750-5700. But I believe that 5750-6000 kind of range would be a range in which market would be moving and any positive trigger coming largely from crude oil side as I believe because the corporate earning figure is likely to remain positive. And interest rate scenario in the country is suggesting that at least in the short-term the interest rate has a tendency to come down.
So from that point of view probably you should be seeing market staying on a higher note, maybe if this kinds of factors turn positive, probably we will 6050-6060 level crossing and we could go in the upper range also. Q: Sugar has started moving along with fertiliser yesterday. Is there newsflow going in that sector or was it just getting picked up because its being lying low for a while?
A: I think it was lying low for a while. Most of the people have started looking at this particularly space once again. One has the tendency, when one doesn