ITC, SBI trading at multi-year lows, accumulate with a long-term view: Nooresh Merani

Let us talk about the broader markets and about the benchmarks first–Nifty and Bank Nifty. What is the damage like in your view?
This is the fastest crack ever in terms of time as well as in terms of magnitude; so this is like a new historical event. What we try to do on technicals is take some guidance from the previous events. But this has been a move which is beyond all parameters historically. So for example, people have been comparing it to previous such historical events for example 2008 or 1987 in the US or 1929. But what we see is, there is not much of a guide when there is a new history made.

But there is one part; that it takes time after that. We have never seen any of the biggest crises go back to 52-weeks high as fast so what we believe is we have to give it another two to four weeks or even a little more before we start taking a call on the market.

What about Bank Nifty as that was the spot where the damage was highest. Understandably so because the economy mirrors Bank Nifty or Bank Nifty mirrors the economy. What are your thoughts there?
In Bank Nifty, even today if we look at it, we are just back to the prices which we went into demonetisation with; this is the case even with the Nifty. So you are at 8000 around DeMon; similarly Bank Nifty was around those prices of say closer to 17,500-18,000, which is where we closely made a bottom recently.

So across the world, what we see is a lot of markets somewhat stopped around the lows of December 2016. So Bank Nifty is also similar; a maximum retracement which we would expect in the current move 22,000 levels.

Leave us with a couple of stocks for our viewers; not for trading but the ones which can be accumulated next couple of months in this lacklustre time.
So I will give you a couple of data points as to why one should start accumulating over a period of time. One data point which you look at is the broader market; how much has been the crack. So in 2008, 87% of the stocks were down 50%; as of today almost 80% of the stocks are down 50% or more. So in terms of broader markets, we are already at 4,000 to 6,000 Nifty. Nifty looks at 8,000 because the top 10-15 stocks have done really well over the last couple of years.

So the view is, if there is going to be some trend change going ahead, the laggards of the Nifty should do well. Couple of stocks which come upon that radar is ITC, which has seen a big sharp correction over the last two-three years as well as in the near term. When you look at the stock price today, we are almost back to the time it was this price of 140-150 was last seen in 2012. Mind you, this company used to be the largest weight in the Nifty back in 2012-2013. So looking at the derivative data, there has been a lot of reduction in the open interest.

Another is State Bank of India which is again back to the prices of 180 to 200 which was last seen in 2016, 2014, 2011, 2012; so the lows of 2008 we are closer to 100 but the bottoms of say 2009 made around Rs 150 to Rs 180 levels; so these are two stocks which looks very interesting to accumulate with the longer term point of view.


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