Instead of playing on the index, play the stocks: Sahil Kapoor, Edelweiss Securities

In a chat with ET Now, Sahil Kapoor, Edelweiss Securities, says go short on DRL, buy Bajaj Auto. Edited excerpts



ET Now: How do you think the technicals are shaping up?

Sahil Kapoor: There are two important things. If you look at the rally from the bottom, we are already about 21.6 per cent up. We had expected the market to touch levels of 8300-8350 which is like October 2015 high. So there is some amount of resistance at these levels but if you look at the structure of the market, it is clearly bullish. To some extent, the market should go and touch the new 52-week high. One important data point that we are looking at is what are the number of stocks in the index and the total NSE stocks which are making new 52-week life highs. So new 52-week highs are rising in numbers. We had a reading of about 10. Whenever this reading touches 18, generally the Nifty itself goes and touches a 52-week high. Right now, I think it is placed closer to 8600. So there is an outside chance that if Nifty were to break 8350, you could see another 200-300 point up move. But unless and until market closes above 8350, there is a good chance that this will be a stock specific market for at least next one or two weeks and you will see Nifty hovering closer to these levels only.

ET Now: What would you like to call as your preferred trading bet for the short term. When I say short term, this week, next week?

Sahil Kapoor: The first one is a short on Dr Reddy’s. Overall on the pharma sector is that we are quite negative in the short term, so Dr Reddy’s had about 12-13 per cent rally. It is a right level to go short with a stop loss of Rs 3280. I am expecting a target of about Rs 2950. Right now it is trading at Rs 3175.

Second is a buy on Bajaj Auto. The stock is breaking out of a two- to three-year consolidation. It is a making a new 52-week high. The volumes are also indicating that the stock can see a very large uppish move. I am expecting the stock to move towards 2700, 2800 over the short term so Bajaj Auto is a buy.

ET Now: What is your view on the Nifty just for the benefit of our viewers, do you think we can go to 8500 and beyond or it would be a tough track now to go to 8400 also?

Sahil Kapoor: I think on the Nifty 8350 seems to be a resistance but to keep in mind Dow and S&P 500 are very close to their life highs. S&P 500 is actually only a per cent and a half away from its lifetime high. If that were to happen in the next one or two sessions, there will be a sentimental or a sympathetic rally in most of the other markets and we might actually go higher. So it is a level which is important but I think the momentum and short-term trend is up. So right now, you should continue with the uptrend. Rather than playing on the index, it is time to play the stocks.