Excerpts from CNBC-TV18’s exclusive interview with Nepolian Pillai:

Q: Earlier you had said you did see signs of relative resilience on the market. Do you think the trend might be turning around for the up now, the short-term trend?

A: For the immediate short-term and the intermediate-term the market is slugging it out at the bottom, and is trying to put in a bottom there. I am happy to the extent that the 3,896 level - what it did about three-days back was held in yesterday’s fall. We are more than happy to see the volatility that’s the first sign that the bottom is near about. So the technical factors are there to say that okay we are at an intermediate kind of bottom.

On the upside, if it moves up from here then 4,165 is the level where it has to cross not even the 4,100. If it crosses 4,165 I will see an additional of another 200-points to around 4,365 and then we take on from there. So right now 4,165 to 4,365 is a level what we are looking at. Yes, the bottom is in place as of now.

Q: How do you trade Reliance right now? That once again dipped below Rs 2,000 yesterday but if the Nifty is slated to bounce according to you, will Reliance bounce as well?

A: It could give a short-term bounce but our view on the stock is that it is getting weaker and weaker as it does not move beyond Rs 2,120 level on the upside and on the downside Rs 1,740 is the final target what I would be looking at. Right now it is falling from about Rs 2,076 levels, yesterday it was around Rs 1,930 so it has fallen by about Rs 140 so you take about Rs 60-70 pullback there. That is utmost what I can see. The stock is getting weaker and selling on the higher side is warranted.

Q: What about State Bank of India (SBI)? What is that chart telling you now?

A: That’s one of the sector, which we covered, extensively in your monthly technical show. Capital goods and banking Index being contrarians we feel that’s the sector, which would give the maximum upside. State Bank of India -even after fundamental news that it may have to write-off about Rs 700 crore in terms of bond evaluations, still it went up. That shows the resilience of the stock.

So any day- State Bank of India, ICICI Bank, Axis Bank that would be on my buy list. On the upside I would expect close to around Rs 1,290 to Rs 1,340 kind of target for the stock. On the bottom I think, Rs 1,020 will be a crucial support but keep buying the dips it will give an upside.

Q: Any signs of a recovery seeing on some of those oil-marketing charts Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL)?

A: The market has a funny way of telling you what it’s likely to do yesterday I found that HPCL, BPCL, Indian Oil Corp. Ltd (IOC) - everything was up about Rs 10-15 in a falling market. You suddenly see overnight, the crude fall. So they have been beaten down though I would have liked, they don’t come up to the level where they are fallen upto. But on the longer-term charts, they are making a huge base. The base-building can take sometime and within that you can see sharper correction on the downside but that doesn’t take the strength out of the stocks. I would say more than an investment, more than trading kind of stocks, I would put them into investment where you pick up every fall and wait patiently for the upside to begin. Right now they maybe in a trading range but eventually they will outperform being an investment sector. So keep buying the fall.

Q: Quick chart check on some of the sugar stocks Renuka Sugars, Bajaj Hindusthan, Balrampur Chini?

A: They have come off the highs but again that sector is trying to put in a major bottom on the downside. As far as Renuka Sugars goes, in the region of about Rs 103 to Rs 98 - that’s the level I would look to buy in and the stock will majorly breakout only beyond Rs 120. If you are trader, get into the stock between Rs 103 or Rs 98 with a target of Rs 120 and if you are an investor then build up positions further up above the Rs 120 level for a target of Rs 129 and Rs 138. It looks good on the chart.

Q: What ACC’s charts telling you now?

A: I am not as sanguine with ACC within the cement pack. The top pick there would be the Grasim Industries stock for us. ACC, notched up hefty gains yesterday beyond Rs 540 it can go upto about Rs 588 to Rs 612 levels but then eventually it may come down to test the Rs 424 level on the downside. 

Q: At what point if you had opened a long over the last couple of days do you consider taking some profits? Would be at your first pit of 4,165 or you keep riding longs now?

A: If you are a short-term trader maybe at 4,165 you could take it and keep buying the reaction lows if it does go to 4,165 and turn from there, I think 4,070 and 3,970 would be the support on the downside but traders normally they sell in and they also try to buy at the breakout. So beyond 4,165 I wouldn’t have hesitation in buying for a target of 4,365, 200-point away from there.

Q: One word on the entire financial space as well. What’s looking strongest there because in all these rate sensitives that’s where we are seeing the biggest bounces?

A: Though on the longest-term they may look weak but the entire financial banking sector- the sector it was at a major support level one-week back and the maximum pullback was expected in that. So I continue to maintain that. My top pick will be continuously ICICI Bank and State Bank of India.

On the other side, probably an IDFC also looks good to me, IDFC and Power Finance Corporation this you could take around. On the smaller side a Central Bank of India looks very good at these Rs 55-56 levels.

Disclosure:

It is safe to assume that my clients & I may have an investment interest in the stocks/sectors discussed.