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You are here : Moneycontrol » News » Technicals

See Nifty support at 3,850: Ashwani Gujral

Published on Mon, Jul 07, 2008 at 09:41 , Updated at Mon, Jul 07, 2008 at 10:50
Source : CNBC-TV18

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According to Ashwani Gujral, whenever we have a breakdown from 4,360 to 4,400 it is quite likely that the markets always go back and test those levels. He sees lower levels ahead and a pullback. As of now, 3,850 level is what the markets can hold on to for the next two-three weeks, he said.

Excerpts from CNBC-TV18’s exclusive interview with Ashwani Gujral:

 

Q: Can you say with some conviction that there is some pullback on the cards or the charts are suggesting that the chances of that are not very high?

 

A: Whenever we have a breakdown from 4,360 to 4,400, it is quite likely that the markets always go back and test those levels. Once 4,100 is crossed, one could see a pullback extending up to 4,360 to 4,400 but that is where fresh shorts would come in and we would see lower level ahead in the months to come. For the moment, 3,850 can hold on for the next two-three weeks. We could be in a pullback but pullbacks generally are difficult to trade in bear markets. So, people would do well to get in on declines. 

 

Q: How are the banks looking to you technically? They were trying to pullback end of last week - PSU (Public Sector Undertaking) and private sector banks?

 

A: Banks would still have a problem in this pullback; they are not looking particularly strong. ICICI Bank could go back and test Rs 720-725 levels in any kind of a pullback, Rs 550 being a support. State Bank of India could head back up to Rs 1,350-1,400. Bank of India looks good; Rs 190 is a support and that could go up to Rs 270-275. Overall, capital goods is looking much stronger in case there is some sort of commodity cool off that is coming then those charts are showing much greater strength. 

 

Q: What is your view on two stocks from Friday - Triveni from sugar and JP Associates?

 

A: Jaiprakash Associate at Rs 130 has become a strong support; I would bag this stock for today. It has got resistance at Rs 171 and about Rs 193. Sugar has been one of the strongest sectors and Triveni Engineering has been moving up for the last three days. If it can maintain support around Rs 80 then next resistance here could be around Rs 98 and Rs 111. Sugar is another sector that should be bagged in this pullback.    

 

Q: How would you trade IT this week?

 

A: IT has been showing a lot of strength and on the upside it’s one of the few sectors that one would like to trade but be with the largecap stocks. If Infosys can hold around Rs 1650, it could see levels of Rs 1,950-2,000 because the market has corrected quite a bit but IT has held on to its lows. It is a sort of an indication for any sort of pullback rally. TCS is another stock that we would look at; Rs 800 is a strong support and it could head back up to Rs 950.

 

Q: What is the best chart in the capital goods space, the top two?

A: Punj Lloyd seems to be getting lot of support around Rs 175-180 level and it could head up to Rs 280-285. Siemens is another one, which has shown a strong move around Rs 380. It is a good support and Rs 530-535 is the sort of level we would look at.

 

Q: Between two heavy weights Reliance and Tata Steel, what is looking weaker right now?

A: Tata Steel is looking weaker because the break down has been more recent. For Reliance, Rs 2,000 remains a key psychological level and if that can hold up then that, it could lead this pullback rally upto Rs 2,250-2,300. ONGC also seems to be finding support around Rs 800. So, both these stocks seem to be holding up the market.

 

Q: How would you approach it now? If it went to 4,100 kinds of levels would you book profits once or you think you can still go long for a couple of 100 points Nifty?

 

A: The actual rally will start only beyond 4,100 because one would remember that 700-point day when the high was around 4,106. So once that level gets taken out, the short-term trend changes to up and then one is positioned for 4,350-4,360 kind of move. So if one is in the market long, there is some more to go at least for the next week-ten days.

 

Q: What would you do with Suzlon Energy now at Rs 205?

 

A: The pullback could probably carry it to Rs 245-250. But these stocks would need much further basing before they can restart their bull markets. Today was a good day to get into midcap infrastructure type of stocks because these are the stocks, which are likely to show maximum kind of bounce. Overall all of these stocks post 10-15% kind of pullback rallies should decline again.

 

Q: Technically how is Cairn India looking to you because there were signs of it cooling off by last week itself?

A: Cairn has weakened because it was out performing for a long time. Now, Rs 230-235 is the final support and if oil continues its cool off, this stock could head back upto Rs 180. Cairn is not likely to go past Rs 300 in a hurry, maximum it will stay range bound between Rs 230-235 to about Rs 275-280.   

 

Disclosure:

 

We don't have any positions in the market right now.

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