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'Markets to test previous highs'

September 05, 2006 13:00 IST

Technical analyst Ashwani Gujral observes that banks, oil and auto stocks have been rallying.

Gujral expects the market to test previous highs. Gujral sees 3400 as a strong support level. Going forward, Gujral expects a sideways move and upward bias in the market.

Gujral expects an upward trajectory in the markets.

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

How are you feeling technically and what are your next targets for this market?

Last time I did say that the market is looking quite strong and the good news here is that we are getting participation from laggards like banks, oil, autos, which did not perform last time.

So 3,550-3,560 is on the cards, above that the markets could go and test  previous highs. 3400 has acted as a good strong support for a bit, so 3,370-3,400 is the support range and from here we could have certain sideways days with some upward bias, but overall the trajectory remains up strongly.

Technically is it showing you any signs that this might be the last dash, the last way for the market?

Even last time, we continuously went through this exercise talking about when the correction would come. I do not think this sort of an analysis has lot of value. Whenever the market makes 150-200 point moves, people need to take money off, re-enter on declines, the corrections will not be sharp as long as the market has so many legs to move up.

So probably, if one gets a high opening today, take some money off, wait for some declines in the market. Early morning gap down or when the US market is down, get back in, so one needs to continuously book profits. But overall the market looks like it's headed up. 

All these banking stocks, have you had a look at Centurion Bank of Punjab, Canara Bank, Vijaya Bank, all of them?

Canara Bank is the one that looks good; I think Canara Bank is headed towards Rs 260-Rs 265. Bank of Baroda is another one, breakout above Rs 250 and that is probably headed to about Rs 265.

Some of the other banks that look good are Corporation Bank, which has a breakout of above Rs 315-316 and that could be headed to about Rs 335-Rs 340.

The other bank is UTI Bank, which is probably looking good for Rs 375-Rs 380. Banks will continue to move up. PNB saw a bit of a correction, but I think PNB is one of the stronger banks, so on any correction towards Rs 450, I think PNB becomes a buy again.

In case of Centurion Bank of Punjab, Rs 24 is the sort of support level that it needs to take out Rs 28 to move further, and once above Rs 28, Centurion could probably see even Rs 38-Rs 39.

Two frontliners Zee Tele and Dabur India?

Zee Telefilms sort of saw a correction after breaking out yesterday. If it can maintain above Rs 306, it should be starting a fresh upmove, which could lead it all the way up to about Rs 380-Rs 385 and then going on to even beyond Rs 400.

Dabur India is still in that range of Rs 130-Rs 155, till it breaks out Rs 155, I would call that counter rangebound and under performing.

What do you think of Hindustan Construction?

Hindustan Construction has sort of made a base, it breaks out above Rs 116, I think target of about Rs 150 is possible because it is the kind of stock that retailers get into, so assuming that retailers are coming back, Rs 150 is a target, Rs 104 is a support for that.

If you have looked at the construction stocks yesterday and how they moved; stocks like IVRCL, Unity Infra etc?

Unity Infra got a good breakout support at Rs 445, above Rs 490 one will see targets of Rs 570 and from now on, one will start seeing those 6-8-10 per cent type of moves in all of these construction stocks. They haven't moved a lot and it is interesting that they are now breaking out of the large base that they have formed. So probably laggards in this rally, but they may have another 20-25 per cent from here.

A quick word on frontline tech and how you would trade them now?

Infosys Technologies, TCS both have broken out. For TCS, Rs 1,030 is a fairly key level, above that one could easily see Rs 1,300-1,350 over a medium-term timeframe. For Infosys, Rs 1,850 was a short-term target, now it is clearly heading towards Rs 2,100. As results come near, we will see outperformance in both these stocks.

What would you do with the two heavyweights, ONGC and Reliance?

Both of them need to break out of certain levels to probably warrant some buying. Reliance needs to sustain above Rs 1130, if it needs to move to about Rs 1170. ONGC needs to get past the level of Rs 1215-1216 to get to about Rs 1250. I would wait for some strength to come in before I enter them.

What about TVS Motor?

TVS Motor bottomed out probably day before. It has got support around Rs 91; if it can move out Rs 111, it can go to about Rs 134.

Have you taken a look at Nitin Spinners?

If Nitin Spinners can stay above Rs 13, it's got targets of Rs 16 and Rs 19.05. I think textile is still a small speculator type of stock, they need to move above certain higher levels to show strength, otherwise they are just moving in ranges, trying to catch-up with the market moves.

A couple of those technology stocks, not the frontliners, but stocks like Polaris and Satyam?

Polaris continues to make its slow moves, target is of Rs 121 and then probably Rs 138 remains valid.

Satyam is probably lagging the frontline stocks, it needs to move above Rs 825 to really gather strength and move back towards Rs 900. There seems to be some problem with Satyam, because this kind of stock movement happens when news coming out is probably not too positive, so I would stick to the two frontliners.

Disclosures: I have no positions in the stocks that we have spoken about.

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