Market may resume decline: Deepak Mohoni

Is the recovery as surprising as kind of cut that we saw yesterday?

Is it a recovery? We are still 175 points down on the sensitive index and 57 on the Nifty.

But 3% up for other small cap space?

Yes, but that’s the main indices which will ultimately affect the small cap space too. So I think the cautionary flags are up that’s for sure.

Cap goods - a bit of a sell off yesterday. But today the likes of Siemens, BHEL the ones which were not affected by bad news have bounced back from the lows at least – do you think they are sustainable?

Siemens has been a bit of an exception for the last few days. It has been the strongest stock in that sector for the last one week or two weeks. So there has been selective buying there and that’s persisting so this is one of the stocks which I would put as an exception.

The others - well as you pointed out the market has bounced since the morning so some stocks have gone into positive territory some have not. But if I had to pick a stock from this sector that would be only Siemens at the moment.

How do you look at the IT index in the charts?

There is a little bit of demand actually for some of the IT midcaps today. I think there is little bit of juggling between the heavyweights and the midcaps. Traditionally, this is a bit of a defensive sector so I would not see too much into this decline.

I would say it’s probably a little bit more than the market today. It was quite a bit less than the market yesterday so sort of evening itself out. I would not really read too much into it today yet.

PSUs have been in the news for the last seven days in news today. The bounce that we have seen – do you think it is sustainable?

Very risky because nothing has really happened. This is all going on hype as it was just said, I mean. I think that word describes it best. You do find this opening there was a really straight hype in the last bull market. So that’s a little bit worrying.

I mean until something concrete happens just expectations that there would be disinvestment here or there and the government does not really move very fast - it always moves slowly. So given that situation I don’t think I would jump into these.

McLeod Russel - the stock initially, when the tea pack started running, was one front runner but started taking a bit of a dip recently. Where are you placing this?

Well this stock and Jayshree Tea have been the two great performers in the sector. They have had a terrific bull market and this decline has started from their peak. So perhaps their longer term friend is still up but this correction is hitting them quite hard.

They are in intermediate downtrends with the rest of the market and the current levels of volatility are quite high. So this could be a sizable correction for them but the move upwards may not be over yet for them.

On the charts it has opened down and stayed down, Punj Lloyd 187 a more weakness?

Well if it closes below 187 that happens to be the low it reached in October it will be straightaway at six month low and its already below the 200 day moving average. So this stock’s long term trend is down.

Now what is happened is that some of these stocks which went into similar downtrends managed to bounce back because of the bull market. What would happen here is that the bull market does not last out or just flattens out or remains weak stocks like this could be very vulnerable. So I would not buy Punj Lloyd at all.

Just two particular stocks from the pharma space that came out with results Fortis Healthcare and Jubilant’s, Fortis is definitely on the upside there on the results front but how are you placing the stock at this point?

Well Jubilant has been holding out quite well last, today its up a 3% or so and it still in a range its top range that’s 325 is the lower end of it. You are not finding too many stocks which are managing to hold on into the range they have been in for the last month or two so. So far the stock looks okay to hold on to no problem there. I miss the other stock you mentioned.

Lupin Industry.

Lupin’s gone into an intermediate downtrend with the rest of the market. It is up a little bit since its lows today but overall its intermediate trend is down the long term trend is up so and even has it in the portfolio is still a hold and this is a reasonably defensive stock. So its even if the market gets into let say a very severe correction this is not the kind of stock you would worry about too much holding in a portfolio.

Fortis Healthcare - purely in terms of momentum on this one and the fact that a lot of trading bets are taken on Fortis. What is your sense and how are the charts looking?

Same as most of the pharmas. The long term trend is up and the intermediate trend is down so it is correcting nothing very alarming at this point of time. It could be a good pick up again once the market’s downtrend bottoms out. At these levels of course I don’t think it’s a good idea to buy anything until this correction is over.

Jet Airways, Spicejet and Kingfisher. Do you like any of these?

Well at this point of time Spicejet courtesy today’s move is obviously the strongest but overall these stocks had been losing steam a little bit in the last three-four weeks. Spicejet had remained in a range 50-57 thereabouts for about two weeks. So that was actually a better performance than the other two stocks which were tending to fall.

I would say that I would not really buy these stocks right now even Spicejet because its reacting to the numbers but sooner or later it will react to the market and that’s a worry.

You don’t seem to be too bullish on the rate sensitives. I was looking at some of the stocks that you think will correct further not looking good.

Well corporation banks running sideways and Allahabad Banks not declining very much so these are holding out. UCO Bank is also one of the stronger ones. But if banks like State Bank, which have some to multiple week lows yesterday, are looking a little tough on the market and being index heavyweight that could affect the days ahead.

The trading fear that I refer to HMT because that has been a bit of a perplexing move that we have seen on this one high on most days circuming to a bit of pressure up 5% in today’s session as well.

Yes but down a bit from the peak of the day not very much Rs 2-3 down from the peak of the day, it had that big move three-four days back when it crossed 100 and then yesterday it has fallen sharply. So this looks like a bounce back from there.

It is still below that peak it had reached three-four days back and hopefully that was not a blow out because if that was a blow then we could probably be seeing more downside here rather than seeing it recover.

The midcap construction pack - the likes of IVRCL, Hindustan Construction and even a small cap ones - are a bit down today. Do you think it as a good buying opportunity?

No I would think that these are extremely vulnerable stocks. When there is a severe market correction, they take a very hard hit and given that they are already not doing very well in the last couple of weeks. So I would stay clear of this pack.

In fact if people have these stocks in their longer term portfolios it may be a good idea to reduce exposure in them and may be have something little more defensive. Asian Paints, which you talked about, is a nice defensive stock. It does not fall much in bear market such of steadily in bull markets.

The couple of buy areas that came in earlier in the show were Ranbaxy and Tinplate India – a large cap pharma and a midcap idea. Do you track either of these on the charts?

I think Ranbaxy had a terrific run till the middle of December since then it started sliding. In fact it has been sliding before the market and not looking very good now at all. This in the last bear market also did not do very well. So this stock though it’s a good performer in bull markets unlike most of the other pharmas is a pretty bad performer in bear markets.

I am not saying we are getting into a bear market but I am just saying that we should have a portfolio which can cope with the bear market if it happens. So for that reason, I would say that Ranbaxy probably not a good idea at all at this time.

Tinplate was gaining a lot of momentum now its already taken a bit of a sharp dip yesterday. I think these kind of stocks which had just run up suddenly in the last month or two they could be a bit vulnerable going ahead. So at this point I would say that don’t do anything with Tinplate.

Once this market correction is over, we will know what sort of a correction it was. If it was not a severe correction then Tinplate holds then it will be a good buy for the months ahead.

What would be your quick call for Monday morning given the way we shut today?

We probably start off little changed - may be half a per cent up or down. Nothing I think the big damage has taken place in these last two sessions. But later on the week, we may again resume the decline I think that’s what people have to be a little cautious about.