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(Interview Transcript)
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Technical Analyst Ashwani Gujral feels that seasonally, the markets are getting into a sweeter spot. "It is possible that we rally back upto 5,300 and in case if that gets taken out, then we can probably look at 5,500," he told CNBC-TV18.
Excerpts from CNBC-TV18’s exclusive interview with Ashwani Gujral:
Q: How much more would you give the short covering side of the story though and how would you trade the Nifty now?
A: I think not only short covering, yesterday you had almost Rs 1,000 crore from both domestic and foreign institutions, it's playing in a very copybook kind of a style. We had this rally from 4,500 right upto 5,300, corrected back to 4,900 - that support has held on and now finally the market is resolving itself on the upside.
The good news never comes in before the market rallies. The market will rally first and good news will come latter on. The way Dow has hit a four-month high - that’s how the market functions when there is maximum uncertainty, markets climb walls of worries and people know that May has been the worst month of the year for many years. What they don’t know is that seasonally June is one of the best month for the market over many years.
Seasonally we are getting into a sweeter spot, so it is possible that we rally back upto 5,300 and in case if that gets taken out, then we can probably look at 5,500.
Q: Does that mean that at this point of time you are working with some sort of higher range for this market or do you think we need to watch the market for few more days before you can reach that conclusion?
A: Definitely, where your earlier stops were at 4,600 those stops have gone up for all categories of investors. I think not breaking of 4,900 inspite of all the bad news really means that the market is digesting the bad news and is likely to head higher rather than lower because we had enough of bad news, bad IIP, bad inflation and the previous lows have held on. So that’s a comforting sign.
Yesterday inspite of no great global cues in the afternoon we kept on gaining ground. Today we have seen institutions are coming back, so short covering will come back, confidence will come back once we are able to maintain above the 200 Day Moving Average (DMA), which is in the range of 5,170-5,200, I think overall the market looks quite positive.
Q: What looks strongest from the sugar stocks Triveni, Bajaj, Renuka?
A: I think Shree Renuka Sugars looks the strongest because it is quite near the previous intermediate top that it made. Renuka now has support at Rs 120, could head towards Rs 166 once it can maintain above this level of Rs 137.
Bajaj Hindustan is more sideways than Renuka that has support around Rs 215. It has resistance around Rs 251 and then Rs 281. Overall entire agriculture space tea, sugar is looking quite strong.
Triveni Engineering is also looking a bit sideways though moving up. That has got support at Rs 112, resistance at Rs 135 and then Rs 153. That is more ranging and I think Renuka has the best chance of moving up.
Q: What do you think about Hindalco and L&T?
A: Aluminum seems to be gaining some strength. Hindalco now has support at Rs 174; I think Rs 222 is a significant resistance once that is crossed probably Rs 253 because some of the base metals are gaining ground here.
L&T is still quite ranging, I do not think one day is worth of move. These stocks are probably going to consolidate for the rest of this year. L&T probably is now ranged between Rs 2,800 and Rs 3,250-3,300. I do not think it is going to cross Rs 3,300 in a hurry.
Q: How would you trade some of these real estate stocks now, Omaxe and HDIL?
A: Real estate is quite range bound probably it is the interest rate pressure but DLF and Unitech are still hanging quite near their lows that they have hit. So broadly they do not seem to be having a lot of upside momentum. The stocks that are gaining momentum are telecom, private sector banks, IT, oil and gas; I do not think real estate or PSU banking stocks that are directly impacted by interest rates has a lot of momentum even on the charts.
contd on pg 2...
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