See Nifty @ 11500 by year-end; like IndusInd Bk: CK Narayan

In the private banking space, he says there is a clear shift of preference. The patronage has shifter from ICICI Bank to Axis Bank and Kotak Mahindra Bank. He likes IndusInd Bank and Kotak Bank and YES Bank. He says Axis Bank is the current trading favourite.

He believes Jubilant Foodworks is a better buy than Just Dial.

Below is the transcript of CK Narayan's interview with Latha Venkatesh, Anuj Singhal and Sonia Shenoy on CNBC-TV18.Latha: What are the chances that 9000 comes today itself? A: I think we are going to start off somewhere near there. In my view the way markets are positioned, the way events are flowing I think 9000 is just going to be one of those milestones and we are going to achieve considerably higher milestones as we go through the rest of the year. I am extremely bullish as far as prospects of the markets are concerned. Latha: If you are looking at the charts, if you have drawn the charts for the quarter say then what are the near-term highs looking like?A: I will even want to take it further down than that. I have drawn the chart for the year and I think 9000 would be for starters. Latha: So what is the main course and the dessert? A: 11,500 is my target for this year. I think that maybe a little wild for some people to look at but I think that is what the charts are indicating. Latha: Is there a one-to-one correspondence with the way the Dow or S&P is going because they are all at record highs? A: I think it is a simple correlation that if the rest of the world is trading near the highs, why should India undergo a substantial correction that most people are talking about? On the street it is pretty common to hear that there will be a 1000 point Nifty drop and so on and for a while the Budget was being point to as a probable cause. However, if there is one thing that the Budget has done, it has actually removed the possibility of a big drop. It may not really herald in a big rise immediately but certainly I don’t think there is any cause for alarm as far as this Budget is concerned. Sonia: Do you see the Bank Nifty take leadership now because that one has been sitting closer to the 20,000 mark, what could the targets be on the Bank Nifty? A: In Bank Nifty we have a slightly dichotomous situation where the PSU banks are not firing and you have State Bank of India (SBI) and a couple of others also. No doubt it is the private sector bank stocks which are extremely well weighted. I think they are on a run and should help to push the Bank Nifty further. However, in the shorter run you may have some sort of outperformance from Bank Nifty but I do believe it will be the Nifty which will keep the lead through this year with sporadic phases in between when the Bank Nifty will do better.

Latha: What would be the pick of the pack in the banking stocks itself, private sector? A: IndusInd Bank is my pick and Kotak Mahindra Bank has been a long-term favourite. Axis Bank is the trading favourite because that has been doing extremely well. It just set off onto yet another new cycle. So Axis Bank, IndusInd Bank, Kotak Mahindra Bank and Yes Bank these would be the four top picks among banking. Latha: Not able to make that dash, that 8950 to 9000 still proving to be a bit of a resistance. We visited that place couple of times haven’t we? Do you think it could be a formidable resistance or it is a days job? A: These round figure resistances always play on the minds of traders and they are happy to take profits in and around that level. However, the traction on the upside that we have seen over the last ever since that bottom at about 8000 that has been fairly persistent. 9000 is just one of those hurdles along the way. Latha: Today you would buy in all dips up to what point, is there a stop loss for a day trade? A: 8950 for traders on the futures. So, that is what I would keep as a minimum cut off. The index these days is doing about 100 points on an average, the Nifty, so if you keep something for smaller stop loss even the normal fluctuation of the day would take you to out. So, you do need to keep it a little further away so this is not exactly a market for small traders. They do need to keep a little distant kind of cut offs or they can play it through smaller quantities because they do have to kind of provide for a bigger margin during intraday fluctuations.  Sonia: This whole infrastructure pocket has seen quite a bit of trading activity in the last one or two days. Would you recommend any fresh positions there? A: I think the focus of the Budget was on infrastructure so people do have something to talk about. There aren’t too many sectors or stocks that the Budget threw up for people to concentrate on. So, infrastructure is certainly one of the spaces. IRB Infrastructure has been consolidating for a long time so that would be one of the stocks that the market could focus on. There are other smaller names but those are extreme trading items but I do believe infrastructure would still be in play. It is an area to look at. Latha: ITC is down 0.9; Ashok Leyland is down 0.2 would you short the former and long the later? A: I think ITC we just saw a slew of downgrades from most of the large broking houses and a few significant ones that and what I read was a lower side target about Rs 320-330 in their downgrades. Market generally tends to overdo these targets on the way down so right now there is a lot of downward momentum, buyers are absent and there is no argument that ITC is a good buy at lower levels. However what exactly would constitute a lower level is very debatable.  I think round figure psychology will work again. It wouldn’t surprise me to see ITC getting pushed down to Rs 300-310 area so definitely a short. Latha: Ashok Leyland? A: Ashok Leyland is a completely different story. That is a stock headed for the skies and you saw that superb numbers come out for February number, some 35 percent higher. The market will want to buy that as a story because within the auto space itself you have fair amount of two-way movements. You have got the big boys Mahindra and Mahindra (M&M), Tata Motors, etc showing lower numbers, you have Maruti Suzuki showing big numbers but that is way up in stratosphere as far as a trader is concerned. So, natural concentration would be towards Ashok Leyland. I think that will have a lot of takers if it were to dip down.

Latha: When you say that the index can reach 11,000 in 365 days it is foolish to ask which because I guess all of them will have to do well but still what would be the leaders of Nifty? A: It is evident that it has to be largecap based. We have had this superlative run in midcaps over the last year and a half so I think even though there will be continued traction in the midcap space it has to be the largecaps which have to carry the baton. Latha: I meant within the Nifty.A: Within the Nifty you don’t have sectoral specifics right now. I think there would be a broad contribution from most names. Pharma, FMCG, IT are the three which will take the lead and run. Even though you are seeing, you will say they are trading 45 times and what not but if you look at the patterns, if you look at the way they are shaped upon on your charts, the extraordinary trended nature of these set of stocks would point to continue patronage and along side with that it is going to be an absence of supply and that is going to be the key reason why these stocks will continue to do well. If you just take any of these names then look at it say three years ago the average PE then would have been about 20-25 and today you are justifying why it should be 45. I don’t see any reason a year from now why you would not justify 55.

Anuj: Bank Nifty has started to do well again but ICICI Bank is still struggling, what do you make of that?A: I think there is a clear shift of preference within the private sector space. Traders are prisoners of anything that moves. So, the patronage keeps shifting among traders. The patronage has clearly shifted among the larger institutional players as well out of ICICI Bank into HDFC Bank, Kotak Bank and Aixs Bank and the others. Axis Bank has virtually doubled post the split, Rs 250 to Rs 500. So, it is a function of the market momentum itself where the patronage keeps shifting and ICICI Bank has been a victim of that. Their last set of results were not so bad that it should get thrashed but then it is now going to follow on the wake of others rather than set the pace. Anuj: Two more stocks, one is Just Dial and the other is Jubilant FoodWorks, both F&O stocks and both doing remarkably well for last one month or so.A: Jubilant Food is a little better than Just Dial I would think at the moment. Jubilant Food buoyed up also by news elements of that railway catering that came out sometime ago. The fact that post the results fresh buying actually emerged even at the higher levels Jubilant has been one of those stocks where people kept complaining about the valuation but kept on buying it and it seemed to be continuing to do so. I think Jubilant is all poised to head much higher.Just Dial is hitting a few road blocks along the way. It is not as well trended as maybe Jubilant is. So, if you were to ask me to choose between the two, I would say Jubilant more certainly over Just Dial.

Latha: I have two sets of stocks in which you may want to advise us, one is non-banking financial companies (NBFCs) and housing finance companies, a subset of NBFCs because Indiabulls and all just tore through the roof and as did other NBFCs; some of them and then the inevitable auto ancillaries which tore to new highs in 2014. A: These two sets that you described are largely within the midcap space and that has been seeing heavy amount of inflow of money particularly from domestic funds where there was huge under ownership of all this. Housing finance companies are now slightly getting segregated where I would think that the momentum continues in the lower ticket housing finance companies Repco’s of the world, Gruh Finance and things like that. They still have more room on the upside. In the housing pack, in the larger one I think HDFC would continue to maintain its lead but the pace there is slower. However, housing finance, smaller ticket I would still remain bullish and want to look to buy those on the lower levels. Auto ancillaries I think would still continue to flourish but the key differentiator there is that it is a very wide basket as compared to housing finance or all the stocks from NBFC. So, you have a much wider basket and various sets of products for people to choose from. So, it is going to be like that Diwali time rockets, something going off from here, something going off from there. So you will have to keep your eye and ear to the ground to know what the story is. However, that is a space I would still keep my eye on and it has got a lot of momentum yet chart patterns are exceedingly good and I would continue to patronise that.