Nifty may see heavy dip in early Jan: K&A Sec

Q: You track sugar as a sector; it has had a good run. What are those charts telling you the likes of Balrampur and Bajaj Hindustan from here?

A: As you said, there has been a good run. So in the very short-term, this is the point where taking some profits off the table is clearly appealing and the dips, given the high volatility of this sector, so to say the high beta can be significant. I don’t find the right way on today or over the next 10 days any sort of a new fresh buying trigger here.

There has been a decent run, for the short -term, take profits and revaluate 20-25% lower if a new buy has come. Though, cyclically over 6 - 9 months time frame and the lows we saw in the last 4-5 months might be a very secure bottom and somewhere half way between that bottom and here, one might have another new investment point arising for a 40-50% gain further up.

Q: You have given us your Nifty trade; give us your top two non-Nifty trading strategies at this point?

A: IFCI is one stock, which has had produced one humongous run and post that, it became sort of a sour grape story. It creates a very nice and wide trading range; Rs 67 is the last low from where it turned and went upto Rs 120. Between Rs 67-120, a dip to Rs 83-84 area is perhaps where the first nibbling can be begun at.

One has to be ready to be able to face; nothing is certain, one can’t have that blind conviction. But to adjust one’s risk as trader, one will have to keep elbow room to keep buying down to as low as Rs 67-68 also, for the reason that the patterns I see on the charts. Rs 120 top is going to be broken out nicely and before that the Rs 67 is not going to break. So with that much clarity one can be a continous contrarian buyer at every dip here and IFCI is one interesting trading idea outside the Nifty here.

In terms of say over the next 2-4 weeks, another non-Nifty trade idea would be to look at Hindustan Construction. If the management has gone and taken an Rs 75 lakh warrants issue at Rs 202 creating a mental floor there. Sum of part valuations in most companies tend to be decent guesswork and by various yardsticks, perhaps at Rs 239-240 area, it is fully valued.

But I think the dip coming down to Rs 220-215 area is where somebody in Hindustan Construction over the next 3-4 months will perhaps find as a floor and right now I think today Hindustan Construction is one stock for short-term trade and one can just go and buy this now for a 5 to 6 years perspective of a 20%-25% kind of move further up from here. Around Rs 270-275 take an exit, be a accumulator again at Rs 215 - 220 area. 

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