Jan series may end at 6100; Bank Nifty to suffer: Expert

A: I think there is enough that has happened over the last few trading sessions, the market this morning also opened with good amount of correction. I think it is quite reasonable to expect that the expiry would happen around 6100 levels unless it is a last half a minute volume-weighted average price (VWAP) related pressure that could come about and there are a variety of stocks that we are noticing this morning which could face some pressure in the last half hour on account of the rollover activity that we have seen till this morning in them.

Sonia: In this series the weakest link has been the Bank Nifty. So you have stocks like Punjab National Bank (PNB), Bank of Baroda (BoB), Axis Bank that will all go down about 15-20 percent within this series. What is your sense of whether this pressure will continue in the February series as well in the Bank Nifty?

A: I think that is the sector as a whole which will continue to be under pressure for sometime not only on account of the local issues surrounding this particular sector but a general assessment of all emerging markets (EMs) which will put a lid on markets as a whole. Even as far as the VWAP related pressure that I was just referring to earlier, have second lined banking stocks such as Oriental Bank of Commerce, Bank of India, Union Bank, Federal Bank, Yes Bank that may come under pressure this afternoon. So the expected behavior of some of these names in February or the residual of February series should be on the downside unless the market bounces back very sharply which looks unlikely at this point in time.

Latha: The fall in the market could be psychological you think?

A: I think the psychological level has already been broken unfortunately. The chartists were looking at the 100 day moving average which was around 6100, it has been broken quite convincingly and the market has traded below 6100 quite comfortably since yesterday and this morning. I think the next level comes in only at 5969 which is the 200 day moving average and also happens to be a support which was well respected in the November draw down. So that is the number psychologically that people could be looking at.

Latha: You were saying that you wouldn’t be surprised if the contract closes closer to 6100. You still hold that view and which stocks do you think might be able to take the Nifty up to that level?

A: There are very few names that are coming out in terms of where the strength could come about. My sense about an expiry at 6100 stems only from the fact that if there was no continued selling pressure that were to translate in the next hour or two, that could be the recovery that one could see. As you just mentioned if the market is still slipping down I think we are then looking at a 6000 kind of a level because psychologically there is nothing between 6100 and 5970 that I mentioned.

Sonia: Apart from the banks which are the most vulnerable names that you are spotting right now because if you look at it from the start of the year something like Tata Steel has fallen about 20 percent, other names also the likes of L&T have lost about 8-10 percent since the start of the year. What are the heavyweights that you would be concerned about?

A: Very specific to today’s activity and therefore I just want to qualify this particular statement. Names like even Bharti Airtel and Idea Cellular could come under pressure in the afternoon today. Names in metal sector like Jindal Steel and Power Limited (JSPL) and Tata Steel could look weaker, Hindalco Industries could look weaker, Tata Power, Voltas, Crompton Greaves, Exide, ACC, IDFC, M&M Finance, there are a host of names what are looking weak because of the rollover activity and the last half hour activity that can come about today.