Nifty at 7000 likely if it breaches 6350: Darashaw

Regan Homavazir, analyst, Darashaw says the Nifty has a very stiff resistance at 6350. However, if it were to breach this, a level of 7000 won’t be too difficult to reach, he adds.

Speaking to CNBC-TV18, Homavazir says investors should buy into every decline towards 6000. “When one looks at the longer-term picture, the parameters are well positioned on the buy side for the Nifty. So, any major decline should be bought into,” he highlights. Also read: Bank Nifty looks stronger than Nifty: Mohit Gaba

On his expectation from Bank Nifty, Homavazir says the Bankex will see a rally if the Nifty sees significant upmove. He is bullish on Kotak Mahindra Bank and says Rs 1200 is likely for the stock. Below is the edited transcript of Homavazir’s interview to CNBC-TV18.

Q: It has been a steady run that the market has seen and it is now sort of ranging around 6,200, what could the next couple of months look like on the Nifty?
A: When one looks at the longer-term picture, the parameters are well positioned on the buy side for the Nifty. So, any major decline should be bought into. Six thousand is a very important psychological support for the Nifty. At the same time on the upside, we need a break above 6,350 for any serious upside to start panning out. Once we have a breakout above 6,350 and make a new all-time high with a monthly close there, then we could be talking about some upsides as serious as 7,500. So, we would recommend buying into the decline towards 6,000 and even at this point, the Nifty doesn’t look that bad from a short-term perspective as well. Q: Is there any time element to this big guess you are making of more than 7,000?
A: Once one has a breakout, one should close it on a monthly closing basis above this 6,350 value. The time element could be very short between that value and 7,500. It is also important to state that we have revisited this 6,350 very often and every time you came close to it, you had quite a sharp cut. This time you are sustaining in and around that price. So you don’t have that serious decline. It only shows that all residual selling pressure has been absorbed. Q: How much of this upmove if we do see it will be led by the Bank Nifty?
A: I think quite significantly. So Bankex in terms of chart position is positioned well enough. So 10,400 on the Bankex is very important to us. Sustaining that price we are going to be looking at the Bankex anywhere more than 13,000. So, we will have stocks like Kotak doing well, you have a State Bank of India (SBI), it looks very good at the current price although we will term it as a bottoming candidate because it has had a very serious decline in the last two years. So Rs 2,300 seems to be logical on SBI. At the same time, when you talk about HDFC and HDFC Bank proviso being the Nifty does what we expect it to do, you could be finding an HDFC at Rs 1,100 and HDFC Bank at about Rs 1,050 respectively.
At the same time, if we were to rate Kotak, it would be about Rs 1,200 from this current market price. That is quite a stellar move that we are expecting.