Stock Market: It’s not just a feeble rally… 11,500 strong support for Nifty: Kunal Bothra

The surprise is, not just private banks, but also most PSU lenders are doing pretty well, according to Kunal Bothra, a veteran market analyst. He also laid bare two stock plays for the next week during an interview with ETNow.

Edited excerpts:

What will be your sense of this rally, especially the Bank Nifty and the way it has moved?

Yes, the Bank Nifty was one of the key reasons why you saw such a sharp move on the Nifty. It was primarily led by not just private banks which have been doing pretty well, but also most PSU lenders, which came as a very strong and positive surprise to the market. It is not just a feeble rally.

Earlier, we were talking of PSU banks as one of the key sectors that tend to give you a rally of 8-10 per cent, but those rallies get sold into quite viciously and easily and these stocks make a new low.

Now it is not the case in point, you now see these stocks trying to make or rather break the previous swing high, which still indicate that there is a new trend or pattern in the making for PSU banking names.

Overall, I believe going forward, for the next week and series, you should see most sectors participating. The underperformers should try and play a catch-up in terms of sectoral participation. So, 11,500-11,400 is a strong support on the Nifty at least for the next week.

Anything interesting, first within the PSU banking space?

Yes. Two stocks should stand out in the PSU banking names at least in the chart pattern. I was looking at them. The midcap one is Union Bank. The stock is if I am not wrong trading around this 95-96 range.

In the last two months, we have seen a recovery from 60 to 95 for the stock. That is, 50-60 per cent odd gains from those levels, but I strongly believe that with the kind of volume patterns in the last two months, the way the rally shaped up, Union Bank could be poised for much higher levels even as a medium term investment play.

If you are a short-term trader, you could look at 102-105 target, which I have been highlighting earlier on the channel and as a positional play you could look at even a possibility of 115-120 for Union Bank.

SBI is coming out of a 10-year sideways range in 2009-19. Approximately, it is coming out of a big sideways range. This level of 320 breakout on SBI should take the stock to a new range altogether. That also remains a strong candidate for solid upside from the current levels.

What is your view as far as DLF is concerned? It did a QIP. Do you think real estate as a sector and within that, some of these favourites of the earlier bull run could be interesting names?

There should be new candidates for strong upside. Yes, DLF is one of them, more so because of its presence in F&O space and the volume surge.

The kind of news flow the stock has seen indicates that it could now be a good one to look at from an investment horizon. When you see such high-beta sectors, one or two candidates look fundamentally good and technically poised very well.

It generally garners more investor interest and DLF could be a candidate. What could probably transpire is that the beta might reduce, the volatility might reduce for DLF. You might see a stable uptrend shaping up.

When I look at the midcap space in the real estate pack, especially the non-F&O ones, one of the other charts that stands out very strongly is Sobha Developers. That stock is also poised for a very strong upside.

A couple of chart indicators on the longer term horizons indicate that the stock could be even poised for another 40-50 per cent upside, given the next one to two years. Sobha Developers could be the other stock from the midcap real estate space.

Any ideas interesting for our viewers next week?

Two ideas. One of them is SBI as we were discussing earlier. The PSU banking index looks extremely strong and there are a couple of candidates which should continue to move up higher.

SBI seems to be one of them, the stock is at a multi-quarter high on a closing basis. You know the volumes in the last few days of this price upmove have been extremely strong and that itself indicates that the stock should be poised for much higher returns.

As a positional play, SBI could be a decent bet, with 340 approximately as a target range and stop loss at 310.

The other stock is a buy on UltraTech Cement. We have seen the stock charging up a couple of weeks ago with those 3,500 to 4000 levels. Then the stock consolidated and now it is trying to make a good comeback.

So, UltraTech Cement could be a good buy, with target of 4,140 and stop loss at 3,900.


Author: Prakash Poojary

Business Analyst

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