Taking stock: Find out what Ashwani Gujral is betting on

In an interview to CNBC-TV18 technical analyst, Ashwani Gujral of ashwanigujral.com shared his reading and outlook on the market and also gave recommendations on various stocks.

Below is the verbatim transcript of the interview.

Anuj: Quite a rocky week specially towards the end. On Friday we did see the market closing at low point but is it presenting a buying opportunity, what would be your prognosis for Nifty and Bank Nifty now?

A: On the Nifty we are still rangebound. We haven’t broken down from the range although today looked like a fairly strong down day but I would think that as long as 9,250-9,270 holds on, maybe this is more a midcap type correction. The other thing is that ICICI Bank has had a strong breakout and if Reliance can probably bounce back from support, the largecap indices could be supported.

The other thing is that this new ordinance which has come out, the Bank Nifty did not react too badly to that. So it is possible that the PSU bank rally resumes, the corporate lender rally basically resumes. So I am not too negative on either the Nifty or the Bank Nifty, you could have more sideways for sure but possibly the midcaps could have a bit of a deeper downmove. I would still buy closer to 9,250 on the Nifty.

Sonia: For next week, since you mentioned public sector undertaking (PSU) banks, are there any fresh buys that you will recommend in any of the PSU names either the frontliners or even the midcaps?

A: All of these guys, Bank of India (BoI), Union Bank, Canara Bank, while they did come off from the highs, they did not close at the lows. So if you get any sort of decline from here maybe 3-5 percent style decline, you should buy into them because if the market would have taken the policy negatively, these guys should have been down 8-10 percent. So today’s reaction is quite positive. They may not immediately start rallying but I think people are still buying into them and we should see higher levels on all of these midcap PSU banks particularly.

Anuj: Your own stock ideas for next week?

A: Given that oil is weak, I am taking on stocks which are oil sensitive. Berger Paints can be bought out there, we are expecting targets of Rs 300 on Berger Paints. Most paint companies have done well, even Asian Paints. Similarly on Jet Airways, we are expecting targets closer to Rs 600, again aviation did well although the market was under pressure. These are stocks which can outperform even in a market which is a bit soft. On microfinance, I think the way Ujjivan Financial Services has broken down below its 200-day moving average (DMA), we could see levels of Rs 260-280. So this is a short sell that people can play into.

Sonia: There is a new segment that we have introduced where we will try to interact with our twitter followers. We have a couple of queries coming in. Kamal Arora has written to us saying that he has purchased 100 shares of Glenmark at Rs 750 and he says he can hold it for one year, should he hold or sell?

A: First of all it is important to understand that this is not the time of pharmaceuticals or IT. So he is making money because Glenmark happens to be in a Rs 750-950 type of range. Each time it gets to Rs 950, you need to exit. Yes, there will come a time when pharma stocks get back into a bull market but this is not their bull market. So if you are making money, take it off. Again enter at Rs 750 and it looks like you will get there fairly soon.

Anuj: We have Saptarshi De and he has bought two of your favourite names, Sobha Developers at Rs 390 and HDFC at Rs 1,380 and he is a long-term investor.

A: He has bought both stocks, which are performing in this current bull market. Sobha he can easily keep Rs 360 type of a stop, real estate will re-resume its rally, the Real Estate (Regulation and Development) Act (RERA) impact will still get factored in and things will get cleaned out in that space. I would think Sobha can easily double from here. It has got clean balance sheet, it is a good developer, so he has bought it fairly near the bottom so nothing to worry on that.

Similarly, HDFC, again good price to buy and housing finance remains a theme, although it will not move like a Can Fin Home but chances are as long as this bull market sustains, housing finance will be a theme if you want to add on any declines towards Rs 1,500-1,520, it is a good place to add and I would expect Rs 1,700-1,750 in the times to come on HDFC.

Sonia: Megh Kenia says that Bhushan Steel after the new steel policy coming in today, is it a buy or a sell from current level?

A: Bhushan Steel has other problems other than the steel policy and metals are not doing very well. So if he has recently bought it maybe keep a stop of Rs 70-72 and while it is in a decent uptrend, but given the way the sector is moving, I am not very positive. If metal start to turnaround, he could get Rs 90-95 but I like to be in spaces where the sector is outperforming. So I would still be much rather trying to buy reactions on non-banking financial companies (NBFCs) rather than bet on metals because metals overall are not looking very good.

Disclosure: Network 18, which publishes moneycontrol.com, is a part of the Reliance Group.