Buy IndusInd Bank, TVS: Sahil Kapoor, Edelweiss Securities

Analyst, Edelweiss Securities, says the Indian market appears to have bounced back but a recovery depends on global markets

ET Now: What do the charts suggest? Did the rally on Friday negate the pessimism and therefore would you be more constructive for a market move on the upside starting next week?

Sahil Kapoor: There are two things. First, whenever markets are bearish, you will generally see strong openings and poor closings. That means, by the end of the week, market should surrender gains. I think this week has been a contrast. We have opened and traded the whole week quite weak and we have got a very strong rally on Friday. So I think, it is the first indication that the kind of downtrend that we were in most likely has ended. Mind you, right now you have to play it as a bounce back because you have to look at the larger timeframe charts to ascertain whether we have hit a final bottom or is this just a bounce? For that to happen, you need a lot of follow-up rallies, largely taking out significant resistance placed at about 7550 to 7600. Second, I think right now, most of the major global markets are correlated. So it is very difficult for one single market to stand out and start a rally on its own. I think unless and until, the volatility indices worldwide correct, you cannot be sure. If all markets close positive and follow through on Monday, I think we will have a sizeable rally across markets.

ET Now: M&M Financial continued to go down pretty much like the telcos even in Friday’s session; do you see more downside for M&M Financial?

Sahil Kapoor: Yes, I think it is caught in a significantly strong downtrend. I do not think there are any reversal signs on the chart right now. I feel there is a significant amount of downside from current levels as well. So if you are short on this counter, you should continue to hold that. Otherwise, I do not think there is any opportunity on the long run. I feel there is another 5-10 per cent downside left in the stock.

ET Now: What would be your advice to traders? What are the top one or two ideas that you would advocate for next week?

Sahil Kapoor: I think from here we may advise traders to play a bounce back. We clearly feel that market has a lot of steam on the upside in the short term. In terms of ideas, the first idea is a buy on IndusInd Bank. We expect IndusInd Bank to gain towards Rs 1000 from current levels of 900. So with a stop below 865, we are clearly seeing this stock outperforming the index and in the next few days it can really go higher. The second idea is a buy on TVS. Again it has clearly outperformed the index. It is trading above its 200-day average plus, we are expecting it to move towards 325 in the short term. So these two ideas I think are apt fro trading next week.