Stock Market

Recommend booking profits; avoid shorting: Ashwani Gujral

Looking at the current state of Nifty, it seems unlikely that the market will touch 9000 anytime soon, says Ashwani Gujral of ashwanigujral.com. So he recommends booking profits but suggests avoiding going short at current levels.

Below is the verbatim transcript of Ashwani Gujral’s interview to Sonia Shenoy and Anuj Singhal on CNBC-TV18.

Anuj: What did you make of the last two days Thursday we had a gap up, but Doji formation the market close at that gap up, didn’t really built on to that and on Friday we close at the low point of the day, especially for the Bank Nifty. Any signs of topping out formation?

Gujral: We have had 7 months of continuous expansion not even a single month has been a red month. Now the average is about 3 to 5, so that we are already overextended, plus we are standing at a key level and the markets kind of had a fresh breakout from 8,700, once we went to 9,000 this time we don’t even seem to be going to 9,000 and basically the fuel in the market is missing, the shorts are missing. So, if that remains the case and we start taking 8,700 out on the downside, I think we can easily pullback into this 8,200-8,500 zone and then make a fresh attempt towards 9,000, because in its current state it does not appear like the market wants to take 9,000 out easily and September 29 I think we have this ICICI Prudential listing.

Often, when big listing happens that can sometime be topping out day of the market, so everything kind of coming together. If not go short t at least people need to take substantial profits off.

Anuj: But Reliance rallied quite a bit this week or has been rallying now. Do you see that being at least one leg of support for the market?

Gujral: It can support, but just one stock trying to pull up a market that’s never a good sign. If IT and banks both start to underperform and you hearing of accidents almost every other day Yes Bank had a QIP that fell off, Axis Bank whether or not SUUTI sale is happening, that is being used as a reason to sell. Once this sort of one leg at a time starts getting broken, the market tend to become weak and banks if they can’t lead it is very difficult for Reliance to take the market to new highs. It can probably support it for a couple of days, but I don’t think it can really make it rally.

Sonia: A lot of midcap stocks did really well this week, whether it was names like Jubilant Life, SRF, Bharat Forge, TVS all hitting new highs, so it was a great week for stock picking. Anything from the midcap space that you can trade next week?

Gujral: All of these guys like Bharat Forge or Jubilant from a very near term next 5 day type of perspective everything is flown off the handle, they are extremely overextended. So, if the market gets into a bit of a corrective mode and you start taking out certain levels, these guys will also sell off. The midcap rally almost at new highs, chances are that that is also going to face some near term headwind, so for the next week just kind of go easy on midcaps and large caps, but if you have a few months of horizon then I believe that things like Ceat they have started a fresh move this is being a very good month for Ceat and chances are next round you should probably see Rs 1,500 on Ceat.

Kirloskar Oil Engines that had about 25 percent rally in the last month there you could see probably levels of Rs 420. Dishman Pharma is ready to break into fresh highs and maybe Rs 275 could be a good target, but next few weeks US elections plus all time highs staring at us, this is going to be very tricky time, because you are at very key levels from where the market can make a sharp move.

Sonia: The other two stocks I wanted to ask you about that are defying gravity one is Eicher Motors, which is touching Rs 25,000 and the other one is Maruti which hit a new high. For a medium investor would it make sense to sort of put some more money here or do you think it kind of done with the rally?

Gujral: See if the market starts correcting even Eicher will come back to about Rs 22,000-23,000 those are good levels to get into Eicher. Maruti will probably get below Rs 5,000. These guys have been rallying for last 6-7 sessions, they have gained I think 10-15 percent over that time. When you buy into outperformers and the market starts to correct, the outperformers get beaten up more than other stocks because that is where people are sitting on profits, so no great risk rewards if you hold them from last year or something then continue to hold on even if we go to 8,500 on the Nifty, I don’t think your levels will come.

We are just expecting a correction, just enough so that the market has some shorts, so that can take this key levels out easily. Right now the problem is we are out of gas and we don’t have fuel to take 9,000 out.