You had prepared a note that bulk of the up move has happened and we should brace for either a pullback or a sideways move. I think a reluctant pullback has happened from there. Half of what you were expecting. So, are you holding your view that probably 500-700 points are still left to be done on Nifty before it turns attractive to be bought again?
Rahul Sharma: So, a much awaited correction has happened. Now, the question is, do we spend some time over here or is there one final crack before we recover? My sense is, at around 21,000, the risk reward becomes favourable for a bounce back, for a reversal where we are expecting Nifty to rebound, possibly from next week onwards and into the February series.

As of now, fingers crossed, we are not getting confirmations on the reversal but what we are keenly doing is keeping a close eye on the sectors and stocks which have not corrected.

If you see in these last few days of correction, we are seeing PSU banks hold very strongly. Private banks have taken the brunt of the selling pressure but the PSU bank index is right up there. Then you see metals, which are pretty solid, followed by the IT and pharma, which is also very solid. As a strategy, what we are advising clients is to switch on to these sectors and stocks for a rebound, for a follow up trade.

The risk essentially is lesser, even if the correction has to extend for a bit. But my sense is, once this expiry is done, we will have more clarity in terms of the institutional positioning in the market, which is what will decide how the February series rolls out. So stay sector specific at this point in time. Once we get the confirmation, the rebound should easily take us beyond the previous high, which was around 22100 odd.

Anything in terms of specific stocks that you are looking at as of now? What are your top picks currently?
Rahul Sharma: Power is something that we like at this point in time. Tata Power remains our top pick in this space. The stock has been doing extremely well. But the kind of move that we have seen in some of the other stocks, relatively, has got more upside left.
My sense is, if you have like a 6-12 month horizon, this is headed for a Rs 500 target. Even for trading purposes, it can be bought at this price or maybe accumulated in the range of Rs 355-365. I think Rs 400 is very much on the cards in the early part of a February series. So, Tata Power can be bought at these levels. Apart from that, Nocil is something that we like on the delivery side. With about a 3-4 month view, one can look to buy at these prices. My sense is in the short term, it can reach Rs 300, but in a slightly medium term, this can even head towards Rs 375, which is a significant upside from the current levels. So, Nocil can be bought with the stop loss placed at Rs 250. Both the stocks are on the buy side, falling into the same criteria that buy the stocks which are exhibiting relative strength in this correction.

Some of the specific cash-based stocks I would like your view on, since you spoke out on power. Transformer stocks are also doing very well in the last few days. TRIL, in particular. Can you check the charts of Transformers and Rectifiers for us?
Rahul Sharma: Yes, so TRIL is one of those charts which has taken off in the last two trading sessions. The volumes have been increasing day on day. And the current setup seems like it is a simply buy and trail stop loss kind of a setup, where blue sky territory could take us anywhere on the upside around Rs 400. So, my sense is, if you are looking to buy fresh at these prices, one can buy with a stop loss of say Rs 330, which is approximately the gap that we have formed today and just keep on trailing stop losses as the stock moves up. It is in a very, very strong bullish grip and momentum. And it would be difficult to put a target on it, but the direction seems up.

Switching gears a bit and in terms of charts for Bajaj Auto, what are you looking for in those terms? How are you seeing this two-wheeler shaping up now?
Rahul Sharma: Bajaj Auto is one of the strongest stocks in the two wheeler space. And, if you see the monthly setup, month-on-month, this is like the fourth, in fact, the fifth consecutive month. The stock has a very strong setup on the daily charts as well. My sense is 7,700, 7,800 is very much on the cards in the short term. The setup remains pretty strong, especially the 15th high which was taken out today on the back of strong volumes.

So, for traders, one can look to buy with a stop loss of Rs 7,300 and Rs 7,800 as a target. But, looking at the bigger picture, this seems like we may have one more month where the stock would head towards Rs 8,000 and above as well.

What about Tech Mahindra, the fall which we are looking at right now? Do you think it is good to buy that fall?
Rahul Sharma: IT remains one of those sectors which is exhibiting strength. Around 18 months of underperformance in this sector. And, from a sectoral perspective, this looks positive. In fact, this dip should be utilized as a buying opportunity in Tech Mahindra, especially because Rs 1,325, 1,300 is a very strong support area for the stock. One can look to buy at these prices. We may see some volatility with today being the monthly expiry but the setup remains pretty solid. One can keep the stop loss at around Rs 1270.

On the rebound, we are expecting Rs 1500-mark to be tested in Tech Mahindra in the coming weeks. So, the positional perspective looks very solid. Tech Mahindra looks pretty solid in the entire IT pack..