IT, pharma to underperform; buy RIL, Concor for short term: Jay Thakkar

We have got almost 1,000 points rally on Nifty and seen clear churning from IT, pharma to mainly high beta names, said Jay Thakkar, Head, Derivatives and Technical Research- AVP - Equity Research at Anand Rathi Financial Services Limited. Excerpts from an interview with ET Now:

ET Now: After this monster move of 8-10 per cent, how do you see Nifty moving?

Jay Thakkar: Absolutely, the move has been quite super. In fact, we have seen the base shifting right from 10,600 to 11,100. Earlier, Nifty was finding resistance and was unable to move above those levels. Now that level has become a very crucial support. In fact, I would also say that above 11,100 where there was a lot of supply, we also had 11,200 where 200-DMA was placed and Nifty is trading well above those levels. So, I would say that now the supports have increased.

We have 11,200 and then 11,100 on a medium term prospective. Now, what has happened is Nifty has been trading quite well in the upward sloping channel or you say rising wedge pattern. In the medium term, till the support levels of 11,100-11,200 is broken, the probability of Nifty inching towards its lifetime high is quite high, which is around 12,150 to 12,200.


As far as the short term trend is concerned, I would say that 11,600 on the upside is an immediate resistance where we have good amount of call option concentration and on the lower side 11,400-11,350 is a very good support area where there is a good support of a falling channel on the hourly charts as well as we have seen good amount of open interest concentration on 11,400 put strike. So, that is a 200-point range nearly in the short term from 11,400 to 11,600 that is likely to provide a breakout on the upside. Till we do not see a breakout from this range, Nifty might just trade within this range and then eventually breakout and inch towards this positional target of 12,150 to 12,200.


ET Now: When we look at just some of the movers this week, you would say that pharma and IT have underperformed? What will be your sense on this, do you think these stocks will continue to underperform?


Jay Thakkar: Overall, I think, yes, the probability of the same is high because we have seen absolute change in this rally. In the past, we saw that IT, pharma was also participating in this kind of move. We have got almost 1,000 points rally on Nifty and seen clear churning from IT, pharma to mainly high beta names. So, there has been a structural change from safe haven to high beta names.

So, it clearly shows on the charts that the indicators have provided a sell crossover on majority of these pharma and IT names. It is not like big sell-off is likely to come there, I am not saying that. But, then, the momentum has lost out there. So we are not going to see any major upside or major upward momentum coming in these stocks because there is clear sell crossover. So, I would not like to recommend shorting but long should be avoided in these two sectors.


ET Now: Any picks for our viewers?


Jay Thakkar: I have two buy recommendations. The first one is a buy on Reliance Industries with a target of Rs 1,370; one can buy this with a stop loss at Rs 1,270. This stock has clearly provided a breakout from a downtrend line resistance and on the weekly charts, it is clearly trading in an upward sloping channel.

The second is Container Corporation that has clearly provided a breakout from classic ascending triangle pattern. The volume and momentum indicators on daily and monthly charts are absolutely in favour of the bulls. So one can buy Container Corporation for a target of Rs 660-680 with a stop loss at Rs 575.