Buy ITC & HPCL, stay away from infra space: Angel Broking

In an interview to CNBC-TV18 Siddharth Bhamre of Angel Broking gave his view on stocks like ITC, Titan Industries, HPCL and BHEL.

He is bullish on ITC as the stock is likely to bounce back after recent correction. Bhamre suggests investors to go long on HPCL and stay away from infrastructure space for now. Further, he expects short formation from Titan Industries, as it has direct correlation with gold and gold prices may correct from current levels. Also read: Stocks in news: Aptech, Crompton, eClerx, Dhanlakshmi Bank Below is the verbatim transcript of his interview to CNBC-TV18 Q: You have got a buy on ITC for the rest of the series? A: If we look at ITC, the correction which happened after correction started in Hindustan Unilever Ltd (HUL) from Rs 370 levels, this stock has corrected mainly because of long unwinding. The stock has support around Rs 320-325. Though we are away from support, we are not expecting further formation of any short positions in this counter. So, buy at current levels. We are expecting some bounce back not a new high but a bounce back which can take it up to Rs 356 odd levels, a stop around Rs 328 should be just fine. Q: Titan Industries from the same series is something that you are not very bullish on? A: Titan’s move has very direct correlation with gold price movement. When Fed spoke about continuation of quantitative easing (QE) for some more time, we had seen how markets have rebound and how gold prices went up. There was some depreciation in dollar which resulted into good amount of rise in Titan also. We are seeing that the rally in Titan was mainly on back of short covering. We have not seen huge formation of long positions and now at current levels, it is finding a bit of resistance. As we are expecting gold prices to correct from current levels and Titan has direct correlation and we are expecting short formation. Short around Rs 280-285 levels, fix a stop loss of about Rs 291. We are expecting a fall towards Rs 257 or below. Q: You have a call on Hindustan Petroleum Corporation Ltd (HPCL) for the day, tell us about that? A: We are seeing stock under pressure mainly because crude oil price is going up and there is Indian rupee depreciating which is like double whammy for the counter. That is the reason stock has corrected. However, any formations of short positions volumes are less. If you look at cash based volume, they have been declining day by day. We are not expecting at least crude oil price to go up from current levels. Currency might appreciate some more but crude oil may cool down from current levels. We are seeing brent having a good amount of resistance between USD 108 per barrel and USD 110 per barrel levels. So, contra buy over here. We are expecting formation of long positions. Go long, not very aggressive targets but you can see Rs 204 in futures. Futures is trading at Rs 6 discount. So, you can go long and fix a stop somewhere around Rs 175. Q: Did we see some short covering on all these infrastructure names with the exception of Bharat Heavy Electricals Ltd (BHEL)? A: We did see some formation of positions in names like DLF and all which have seen some bounce. However, we will not give too much weightage to it. At the same time the covering is not of that nature where you would see significant rallies. So, overall I don’t think one should touch infrastructure space as of now. Overall market we are not expecting big movements on the either side. Foreign institutional investors (FIIs) are not selling in markets, domestic institutional investors (DIIs) are selling. At the same time, we are not leveraged at all. If you look at the F&O index and stock futures, no leverage, consensus is bearish and implied volatilities (IVs) have increased. I am not expecting big falls in this market.