Initiate short positions on Nifty below 5850: Anu Jain

In an interview to CNBC-TV18, Anu Jain, Sr Vice President of IIFL Private Wealth Management spoke about her reading and outlook for the market.

Below is a verbatim transcript of the interview:

Q: What about you, a close below what level would mean the traders should initiate short positions on the index?

A: I am looking at 5,850 but on the Bank Nifty I am looking more at 12,300-12,315 because after having moved in such a stellar fashion over the last ten days, some kind of a sideway movement is expected on Bank Nifty. Basically, we have put a stop loss to our longs and let them run till the stop loss is not hit. Short call would be taken only if 12,300 on the Bank Nifty is broken more than the Nifty because the Nifty can consolidate.

As we have seen on Friday, the results of other stocks have not let the Nifty drift down much more than what it could have on Friday. So, individual stock calls for longs will exist. Nifty 5,850 odd down would give an open up for about 70-80 points on the downside.

For Bank Nifty, the biggest constituent out there is the public sector undertaking (PSU) banks and how they move over the next two weeks. We saw Vijaya Bank ’s results on Friday and a lot of constituents of the PSU bank sector can make that 12,300 sacrosanct so want to see how that holds out. If that holds out, there could be a little more steam. Obviously, there is Reserve Bank of India (RBI) rate cut, there are other political influences this week and next week but I think watching that level would be crucial.

Q: Do you sense any vulnerability in some of the largecap names like Reliance Industries Ltd (RIL) or Hindustan Unilever Ltd (HUL) on Friday?

A: HUL has been a non-performer for a very long time so I am not looking at that as an indicator. Though fast moving consumer goods (FMCG) and pharmaceuticals kind of leading the pack despite the volatility, I do not think I am looking at HUL as any indicator.

On the energy sector side, yes RIL was giving some hopes especially on the expiry day we saw a short covering rally, which took it about 2.5 percent higher. So, that has been a disappointment. If it breaks down below that Rs 790-785 levels you could see probably some more weakness coming into it.

However, what was heartening on the other side was that results of something like an Idea Cellular , Maruti Suzuki India , LIC Housing Finance . Technically they have been crossing crucial levels so you could see them moving much more than what they are at the right moment currently. So that could give a balanced strength to the market when the bank is correcting. So, that could balance it out. Nifty may in eventuality not do something which is very sharp.

Q: Give us a quick chart check if you have looked at Hexaware Technologies ?

A: Hexaware Technologies has got the resistance in that Rs 87-88 so if it opens there and it takes in the supply, which is existing at that level then Rs 94 is exactly where you all are targeting on. That is the technical levels as well. So, you will see it moved to that zone but Rs 87-88 continues to be a resistance zone.

Q: You were talking about the fillip that many stocks got because of earnings, LIC Housing Finance is one such stock, how would you approach it today?

A: The 50-day moving average of LIC Housing Finance was around Rs 235 level. This is the stock which was sometime back at Rs 290 and then went and tested Rs 209. It had a massive fall after the last results.

On a result day, it crossed the 50-day moving average where it was getting a lot of resistance in the last one and a half month at about Rs 235, held that and closed comfortably over that. So, next target would obviously be the 200 day moving average (DMA) which is around that Rs 257 level. That is going to get some crucial resistance out there but if it can manage to hold Rs 257 then it gets into that bullish territory where it can test the previous high.

I would be bullish at this level. Even if it drops a percentage or two, I would still buy this counter and would probably hold it for a target of Rs 257 as the first one. So buy on dips is the best policy for this stock.

Q: Indiabulls Real Estate was up 20 percent last week, what is the call there?

A: The real estate sector has taken quite a beating. I would be skeptical about it because though Indiabulls Real Estate has moved up, Unitech and DLF are still showing weakness. I would probably not enter this stock or this sector at the moment.

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Monday, April 29th, 2013 EN

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