Nifty may face hurdle at 8,800; earnings key trigger ahead: IIFL

The Nifty could gain another 50-70 points but there is likely to be strong resistance at 8,800 level, says Sanjiv Bhasin, Executive VP - Markets and Corporate Affairs at IIFL.He feels fund flows may stay muted till there is certainty on geopolitical problems and clarity on issues in European banking space and bond yields. 

Earnings will now start off and how it pans out will be more important than the actual Nifty levels, he says in an interview to CNBC-TV18. However, for the next few days to a week he sees Nifty trading in the 8,500-8,800 range.He also shared his view on specific stocks and sector. Below is the transcript of Sanjiv Bhasin’s interview to Prashant Nair and Ekta Batra on CNBC-TV18.Prashant: Ashwani Gujral just pointed out that whatever way the RBI decides, the state of the market is such that it will find positives from that decision. Would you agree with that? How are you placed?A: You could have another 50-70 points on the Nifty 8,800 is where we think you would find a lot of resistance. We also think flows will be muted till the time we get a little more certainty on the geopolitical and some of the European problems, European banks, bond yields, so it is status quo with a 50-70 point upmove. This first dip has been bought very aggressively as would be the case that most people on the sidelines have jumped in irrespective of the risk which is there. We think earnings calendar will play out and how that plays out will be more important in the second half of October as to where the direction of the Nifty is. So, for us, 8,500-8,800 would be the range for the next few days or a week.Ekta: One of your midcap picks include something like a Godrej properties. What is the rationale behind that?A: At a time when this sector is going through immense stress, this is one company which is standing out. And purely on the back of execution and pedigree management. Thirdly, it is also only on lease it takes land. It does not own much land banks. That is why it has been away from most of the crises on the debt side. And fourthly, if we are going to see gross domestic product (GDP) at 7.5 and the indices go up, over a period of time, real estate is definitely one sector which should be an outperformer in 2017. And given that on the constructive side, if you went to the National Capital Region (NCR), Gurgaon or anywhere in the country, Godrej Properties is one company which is standing out as far as order inflow, execution and the amount of visibility they have in the next three years. We are extremely bullish on this stock for the next three years with a short-term target of Rs 450 and almost a doubling target in the next three years.Prashant: Another one is Cosmo Films. Can you talk about that?A: This is the best play on the implementation of the goods and services tax (GST). You have seen, the stock is one of the market leaders in the packaging side, one of the biggest players in the Biaxially Oriented Polypropylene Films (BOPP) segment with an overseas 35 percent of its business in the US and in recent times we have reported very strong earnings. Almost Rs 50 earnings per share (EPS), stock is about 7.5-8 times and we think that given GST’s implementation, packaging industry would be one of the front runners as a sector. So, along with this, Uflex are the market leaders in both the segments and we have a short-term target of Rs 475 by the yearend, but a longer term target of Rs 600 over a period of one year.