Talking to ET Now, Dr CK Narayan , Founder, Chart Advise , says as long as the liquidity flow remains and that there are no adverse occurrences whether domestically or from overseas, there is no reason for any substantial pullback in the Nifty.
Let's first talk about Nifty and the entire series.
The Nifty has actually simply continued what it was doing in the earlier weeks. Now good news has been flowing right through the week in terms of much better than anticipated results. The bank recapitalisation was along expected lines but that also helped the Nifty, the Bank Nifty, etc, add to their already accrued gains. The IT index also chipped in. So collectively between the other large caps IT and banks all of them helped the Nifty gain and reach where it has reached and finishing the Jan series, creating an all-time new high. Now no nervousness is being displayed by the markets ahead of the budget where various kind of talks are there but then it does seem that the flow of liquidity into the market remains persistent and the shift from midcaps to large caps and the index levels sell off.
So long as the liquidity flow remains and that there are no adverse occurrences whether domestically or from overseas, I do not see any reason why there should be any substantial pullback in the Nifty as it were. This does not mean that normal pullbacks cannot occur. It is just that the trends will not change even if there were to be a couple of 100 points of pullbacks because the trend change points have been left far behind. At the moment, one could probably keep 10,500 as the nearest trend change level that is a comfortable distance away for us to worry about at the moment.
Let us start with United Spirits, it is a stock which was down 6% on Wednesday, it is down another 4% on Thursday. What is your view on that?
This has been a case of deep disappointment because a lot of expectations were built up in earlier weeks when the stock actually had a pretty rocketing ride and it had reached all the way till 4000 and people were suddenly looking at it with different eyes. In line with that rise, Radico Khaitan was up and UBL was up and most of the liquor stocks seen doing well. In that environment, the very poor result which came out is what created the dent and there was deep amount of disappointment and the two gap down movements that we have seen across the last couple of sessions is indicative of some portfolio long positions being liquidated. Now this does not bode too well for an immediate recovery. The stock might remain under for some more time. I do not think the stock is down and out for the count but certainly for the short term, I do not believe it will get up in a hurry at the moment.
Do you have any call on Maruti?
In the case of Maruti, it has been stock which has simply defined all expectations so it had come up to a point where I think people had started getting somewhat complacent that Maruti can never fall and just when such kind of sentiment hits the market, that is when it slams you in the face a bit and that seems to have happened with Maruti in recent times. Thursday's result has hit post market but then the expectations for that do not seem to have been too robust in the market. A bit of a correction has been set off in Maruti, at least for the short to intermediate term, and the stock is unlikely to achieve new highs like it used to in the past. Across the next few weeks, it is more likely to be in range or in a corrective mode.