Nifty support at 5620; stick to stocks-specific trade: IIFL

Irrespective of how the global scenario pans out going ahead, Nifty is likely to find support at 5,620, Anu Jain, senior vice president - IIFL Private Wealth Management said in an interview to CNBC-TV18. If that fails, the next level to watch out for would be 5,585, she added.

Jain is not so bearish on the market and suggests betting on individual stocks instead of Nifty this week.

"Individual stocks are broken down and they are beyond the point where one could say that there is scope for it to fall more. A global contagion can lead to a fall further. Stocks which will have pullbacks are looking good," she elaborated.

Below is the verbatim transcript of Jain's interview with CNBC-TV18.

Q: Not a great week gone by, how are things looking for the Nifty? Even if you were to take a positional stand, where do you think the Nifty could be headed?

A: The immediate support where I think market could hold on to irrespective of the global scenario is 5,585 to 5,620. That is a big support. That is about 150 Nifty down, I am not so bearish. It is just for the effect that that is the level where one has real support. Even on the day of Budget, 5,650 around was a good support.

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Having said that, individual stocks are broken down and they are beyond the point where one could say that there is scope for it to fall more. One needs a global contagion now for these things to fall further. So, if one looks at the chart of Reliance Capital or some of the higher beta traders like Pantaloon Retail or some of the smaller stocks like Lanco Infratech also. So, at least for this interim move one has broken every level, come to a level where one will see selling saturate, buying may emerge after sometime but one will not fall further is what the charts are saying. Individually some stocks, which will have pullbacks, are looking good. Therefore, to the extent instead of playing Nifty, playing stocks and with a positive bias for this week, that is the mood I am starting my Monday with.

Q: Is the primary point of pressure still the banks, in context of the market losing 2 percent, the Bank Nifty is down 4.5 percent from last week?

A: If one look at the weightage on it, be it State Bank of India, ICICI Bank, Axis Bank, all of them -- forget giving support -- have broken down. However, if one were to look at what is causing panic in the market or what would change the sentiment, if one see right from the beginning of 5,250-5,300, DLF was the lead indicator this time for the trend so it started moving even before the market gave any signal that it is going to raise up to 6,100 and that had continuously stayed positive, held on to very strong levels.

Post the Budget because of whatever were the announcements, one saw that Rs 270-280 coming down to Rs 252. It is a major break for that sector. I could have understood HDIL and Indiabulls Real Estate because they have been very choppy but DLF was exceptionally strong chart in this whole period. To the extent that I would consider it was a lead indicator for the market it has broken down to Rs 250 and Rs 248 is a very strong support. If it manages to hold there that would also give lead indicator to how the trend is for the Nifty right now. Therefore, the sentiment over the last one week or after the Budget is more that the real estate has broken down, broken down stocks like Reliance Capital, broken down stocks like infrastructure have broken further. So, till one do not see buying emerge there, I do not think the sentiment for a person to trade whether it is for two days or whether it is for a week-15 days, is going to change very drastically. One need to see some kind of respite coming to these sectors before people starts getting confidence.

So, it is like confidence was broken whole of last year, people started getting little comfortable with the market and there it goes again. Therefore, people are thinking that it doesn’t make sense to get into the market but these are very good prices for somebody who is looking for more than three months perspective to get into the market.

Q: Can you think of one or two names in the infrastructure space, any of these Larsen and Toubro (L&T), Jaiprakash Associates - type of names, which you think are good for a bounce now?

A: I would agree with JP Associates. Obviously it has fallen from Rs 100. Around the panic levels, it does not break Rs 67-68 levels. So, if one has got in at Rs 69-70 – it is a great price to be in this counter. What I have seen in this chart pattern is if it can hold on Rs 74.50-75, it has attempted this twice or thrice whenever the market looked benign in the last two-three weeks, it is facing resistance there. If it were to cross Rs 74.50 on a closing basis, I think one is running for Rs 78.50-81, which is still a 7-8 percent pullback. I would want to make a position in JP Associates at these levels. If the market gives a pullback, this will give 7-8 percent. Lanco Infratech may give percentage-wise move but I think the risk reward is slightly more in favour of JP Associates so I would play that.
 
Q: You have got a strategy on Bharat Petroleum Corporation (BPCL) today. How are you trading that?

A: This whole sector was rammed because of expectation in the Budget that there would be levies. It has gone down from about Rs 449, which was a two month high to about Rs 429, which was a one month high right up to Rs 375. It is at Rs 385. It has support of Rs 375. I think the whole sector looks poised for a pullback. Within that one saw Hindustan Petroleum Corporation (HPCL) and BPCL move even on Friday. So, as per the charts, there would be short covering as well as long, which would be made into these counters. The immediate first counter move is about Rs 405. So with Rs 10 for stop loss and about Rs 20 for an upmove with 1:2 ratio, this is a good stock to get in for the week.