Guest Column: Support for Nifty between 5,150-5,180

Nifty continued the bearish trend which was in effect from last couple of days. Inability to close above the level of 5,375 triggered the weakness and markets found it easy to breach supports. The selloff got intensified as a result of Global drag in international equities. Our markets also reacted negatively and Nifty broke the level of 5,300 comfortably. Market bounced back from the lows but were not able to close above the 5,300 level. Interest rate sensitive and Banks took the beating. Economic data release from the Chinese and Europe have added further pressure  by a much weaker than expected Chinese PMI number, which indicated contraction for fifth straight month.

Technically the level of 5,375 will act as a major hurdle for the market.  On the lower side 5,150-5,180 will act as a major support for the market and dismissal of the 5,150 may result into quick sell off to 5,010 minimum and maximum to 4,950 levels. Closing above the level of 5,375 can take index to the level of 5,550-5,600. Investors can certainly look for index stocks to buy around 5,200 levels.

Gold has good support at $1,600 levels. Crude has remained in range. Breakout is not expected as of now. INR breached the level of 51, fresh inflows in equity can be seen on account of currency depreciation.

Sectoral View

Health Care and FMCG

These are the preferred sector for the long trade in the market with a broader perspective. Look for Dr.Reddys, Sun Pharma, ITC, Colgate and Hind Unilever for the long trade at good support.

Auto

Mixed action witnessed. Longs can be built at considerable support in Tata Motors, M&M.

Metals, Capital Goods and Power

Support buying should be seen in the sector stocks only at lower levels. Picks are BGR , BHEL, Bhusan Steel and Adani Power.

Consumer Durables

Inflow seen during the last couple of sessions. Look for support longs in Titan Inds.

Oil and Gas

Cairn india remain the preferred buy side stock at good support levels.

Real Estate

Pressure has been in stocks. One can wait for some time for the stock to bottom out.

Recommendations

Buy call options at 5,170-5,200 level on Nifty with stop at 5,150 closing basis stop loss for target of 5,300-5,375.

Buy Put options at breach of 5,150 level on Nifty with target of 5,050-49,50 and stop loss above the close of 5,210.

(Author is Head- Technical Research with Kotak Securities)