Risk-on is back: Jai Bala sees new Nifty highs by May 2017

Nifty and Sensex both rallied more than a two-month high in late trade intraday Friday.

Jai Bala of cashthechaos.com expects market to hit record highs in the next 45-60 weeks and sees Nifty at a level of 9660 while Bank Nifty surpassing its previous high in March 2015.

In an interview CNBC-TV18, he said that precious metal are faring well on the commodities front and silver has outperformed gold which indicates that investors are in a risk-on mode.

Keeping a bullish stance on the Indian rupee, he expects the currency to appreciate considerably against the euro vis-a-vis USD.Below is the transcript of Jai Bala's interview with CNBC-TV18's Latha Venkatesh and Ekta Batra.Latha: It has been an exciting week for even an index player, 7550 has been definitely conquered by the last minute or the last hour moves of the Nifty. What is the position for next week? Bala: We have concentrated more on the structure of the market than the levels of the market. Market from February 29 lows has moved up to current levels in a five step fashion. In technical parlance when the markets moves up in a five step fashion we call that as a trend and this is a confirmation of the resumption of the uptrend that we had been saying is going to happen ever since several months ago. The market is bound to hit record highs in my opinion from a timeframe of 45-60 weeks from hereon. So, we are very positive on the market and the bank Nifty as well as the Nifty have done tremendously well over the last couple of weeks. Latha: 45-60 weeks what level did you say? Bala: I did not say level but I am looking at a level of 9660 on the Nifty and probably bank Nifty will cooperate along with that and take out the highs made in March 2015. Ekta: Commodity stocks how much would they possibly participate in the next 40-60 weeks considering the participation we have already seen in the past few trading sessions? Bala: Metals are actually having a very big relief rally. I am treating the current move as a big relief rally rather than something beyond that. If you look at international markets on the commodity front, precious metals are starting to do very well and silver is outperforming gold. This is an indication of risk on in the market. Whenever silver outperforms gold that is a very clear indication that the markets risk on is coming on. So, from metals point that is an important aspect that you need to take out and if you are looking at specific stocks, instead of frontline metal stocks in the commodity space you can look at something like Tata Metalliks, I think that is a doubler over the next 40-60 weeks. Latha: What would the leaders of this rally towards 9660 be? The structural shift that you see in the indices where is it best represented stockwise? Bala: We look at the market from a macro technical perspective. I am very bullish on the Indian rupee, I think it is going to appreciate considerably. The bullishness emanates more from the Euro-INR cross rather than the USD-INR cross. That doesn't mean that USD-INR is going to depreciate or rather INR is not going to appreciate against the US dollar. However the appreciation that you are going to see against the Euro is going to be very considerable compared to the appreciation it is going to see against the USD. I am seeing a 20 percent appreciation come through for the Euro-INR cross. I am looking at a level of about 61 from the current level of 75 odd. That is a very important driver for the market although it is not a correlation, it is a supportive evidence of the bullishness that we are seeing in the market. As far as market structure goes, I have been saying for quite some time that Reliance is going to take the lead and I still insist on that view. The move from hereon till Rs 1100 is going to be a bit choppy. Once it takes out Rs 1100 it is going to be a much more smoother ride for the stock. I am also positive on the FMCG space. Without the bank Nifty nothing is going to happen. Within the bank Nifty space I am very positive on Axis Bank. The February low that it made is very unlikely to be taken out. We are looking at something like Rs 600-750 for the stock from 45-60 weeks timeframe. Ekta: What about ICICI Bank because we have seen that one surge around 7 percent odd this week itself. It has outperformed all of the other banking stocks in the Nifty space, your thoughts? Bala: They have all gone down to significant supports and taken a sort of base formation out there. Not exactly a clear base but they have found strong support at a significant juncture. The reversal in most of these frontline stocks is going to be quite important, ICICI Bank, State Bank of India, as well as Axis. The reason why I am more positive on Axis that ICICI is that it is coming up from a very important multiple clusters from multiple time zones. So, it has got a very solid base. I am sure in a few weeks from now on Axis is going to do what ICICI is doing right at this point of time. Latha: Any one non Nifty stock?700 baggers have been actually in sugar but any non Nifty stock? Bala: You can look at something like Century Textiles. Century Textiles is looking very positive. In fact Century Textiles as well as Raymond is looking quite positive. I don't know what is in the textile space but if you look at Century Textiles it is looking quite promising from this point of time. I think you can look at something like Rs 650-700 for the stock.