Market not very strong on momentum but the trend is still upwards: Sahil Kapoor

In a chat with ET Now, Sahil Kapoor, Edelweiss Securities, says 8300 to 8280 is an excellent area of support. The index is unlikely to breach that level. Edited excerpts:

ET Now: On Friday’s session, the index breadth was poor. Does this augur poorly for the expiry week? What levels do you envisage the next three days?
Sahil Kapoor: Generally I do not like poor closings. Whenever you have a weekly close which is not very strong it does not bode well for the index per se but given the levels we are at right now, 8300 to 8280 is an excellent area of support. I do not think the index will breach that level. Secondly, a part of these selling or profit taking could be because of the event that we have overnight. A lot of people will be a little sceptical about whether to take positions at home or not. I would not read too much into today’s session in terms of the decisiveness of this move for looking at the trend but if the index comes close to 8300-8280 level, a buy trade would get set up and on the upside, the index should go and touch the 8500 or 8600 range or thereabout before we get into the budget. The trend is still clearly a little positive. It is not extremely strong on momentum but the trend is still towards the upside.

ET Now: A word on Bharat Financial and M&M Finance. How aggravated the selling was in these two names in the week gone by?
Sahil Kapoor: Bharat Financial most likely has seen a significant amount of selling and possibly this stock is going to see a significant low in the coming week. The rally from the bottom was quite significant in terms of percentage return and we have seen the stock has given up a part of it. The overall price trajectory is going to stall at the current levels I see another 2-3% down move from here and that is about it. There could be a revival on the upside and the stock could trade upwards of Rs 680-700 in the next few months.

ET Now: Leave us with some ideas of a couple of stocks that you believe can be traded next week?
Sahil Kapoor: I have two stocks both of them have the same pattern but on the opposite side so one is Motherson Sumi which has been consolidating close to Rs 330 levels. It has not been able to breach it successfully but the chart is significantly bullish right now.

I see Motherson going towards level of Rs 355-360. It is a buy call with a stop loss below Rs 318. The other is actually almost opposite chart of Dr Reddy’s where we are seeing a breakdown close to Rs 2900 levels. You could sell close to Rs 2940-2950 range. I am expecting a stock to go towards Rs 2800 or even lower stop loss should be above Rs 3000.