Nifty may not hit 9K in a hurry; like Glenmark: PhillipCap

Latha: How are things panning out? We saw that big sell off yesterday how is the April contract itself panning up you think? You think 9,000 is not going to come in a hurry?

A: Yes, I would subscribe to that view that 9,000 may not come in a hurry. Primarily, because the recent attempt that Nifty made and faced a good resistance at 8,820-8,850 band should hold for a moment. I would imagine that they could possibly be a testing of a support level which if you look at the Put distribution at this point in time for Nifty it is concentrated at 8,600 and technically if you look at it the worst case situation could it at 8,200. So my sense is that there could be a testing of the support before Nifty were to march and go beyond 8,900 or 9,000.

Sonia: If the Nifty does test that support, what could the constituents of the Index be that would drag it there?

A: Bank Nifty Index will be one of the foremost contributors to the slide that I am visualising and IT also is not appearing to be helpful. It is also possible that the traditional and routine defense plays that we look at such as the fast moving consumer goods (FMCG) and the largecap pharma may also not be supportive and therefore contribute to the slide towards 8,600 and below.

Latha: This 8,600 is something you are watching for in this contract itself?

A: That is right, so for this April contract I am visualising weakness and therefore I am looking at lower Nifty levels as we move into the expiry week next week.

Latha: What kind of a downside therefore on the Bank Nifty?

A: There is a downside of as much as about 3-5 percent as far as the Bank Nifty Index is concerned. However, I also want to highlight something that you were referring to earlier, that in this entire possible downside of the Bank Nifty Index there will be a handful of smaller private banks that may out do the Bank Nifty Index. The names that come to our assessment are YES Bank, IndusInd Bank and even Kotak Mahindra Bank which is looking weakish today but could render some support in the coming few trading days.

Sonia: One stock that has been ranked underperformer for the last many months but has now started to perform is Oil and Natural Gas Corporation (ONGC). In fact even this morning ONGC is up above 3 percent odd or so how would you move on that name?

A: I think not only ONGC, and I agree with you, last few weeks and months has been a bit of a consolidation to downward momentum for ONGC. It was also not very happy news for Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and even Essar Oil. So our assessment is that going forward over the next couple of weeks or perhaps some months or so refinery stocks, the oil marketing companies and ONGC should also look stronger and after the consolidation should start showing an upward momentum here after.

Latha: Some of the weakness may be a goodish bit has been contributed to by ICICI Bank. Is there any specific strategy you would recommend in ICICI Bank? Is there still some short space over there?

A: I would rather play the other side of this entire market. Because even after this correction or testing of the support that I am subscribing to as an opinion I still believe that it is the longer next 1 year -18 month play that I would like to participate our investors into. Therefore I will always be a hunter of stocks when the supports are tested.

Latha: Would you hunt for value in any of the PSU Banks at all? I mean Punjab National Bank (PNB) has been a rank out performer this month. Even Bank of India (BOI) has been performing reasonably well, is there a tactical play a long-term, play anything at all in any of the PSU banks?

A: As far as the tactical play and an 18-24 months situation is concerned where Nifty can go much beyond what we have all visualised up till now. Names like BOI, PNB and State Bank of India (SBI) will always and should find names in my portfolio.

Sonia: This year has also been very good for trading so many of the traders favourite stock Suzlon, Wockhardt, Aurobindo Pharma's of the world have done exceptionally well this year. From that pocket anything that you would advise that still commands a buy?

A: Wockhardt of course has given stupendous returns. Aurobindo has you were mentioning a little while away has only one way to play out as far as the technical charts are concerned which is only a long side of it. However, if one were to play on the pharma stocks and even with the training view I would look at the midcap pharma, stocks to show another 10-15 percent upside. The names that come to our mind are names such as Glenmark, Divis Laboratories, Torrent Pharma and Cadila Healthcare these are the names we are looking at to play on the trading side for pharma sector in the midcap space.

Latha: You won’t want to do any tactical sell in any of the large pharma companies? I mean they have given such gains Sun Pharma for instance the stock was down and open interest also widened in the last few days?

A: Here again, I am looking for a possible correction of about 3-5 percent in the large pharma companies this is my estimate it may or may not come about. However, DRL, Sun Pharma and Lupin were to show me another 3-5 percent downside then that will be the support at which I may like to accumulate these names.

Disclosures: I may personally have some propositions in the midcap space about the names that I mentioned. They could also be names that appear in the proprietary trading book that we have in Phillip Capital.