Given the amount of volatility surrounding the market, the Nifty is expected to hover in the broad range of 5,600-6,000 for sometime now, Amit Trivedi, Co-Founder, Investworks.in said in an interview to CNBC-TV18.
"From a valuation perspective 5,700 seems reasonable. Some political event could drive the markets lower, but liquidity would support markets and bring it back to 6,000 levels," he said in an interview to CNBC-TV18.
Below is the edited transcript of Amit Trivedi's interview with CNBC-TV18
Q: Terrible couple of days on the index. How are you trading the Nifty now and with what kind of target?
A: Markets have been quite volatile. After the Budget, the Nifty hit a low of around 5,680 and closed the February series. From there it rallied around 5 percent to 5,960 and then gave up all the gains. Given the way emerging markets are behaving, 5,600-6,000 seems to be a broad range in which the Nifty will trade.
From a valuation perspective 5,700 seems reasonable. Some political event could drive the markets lower, but liquidity would support markets and bring it back to 6,000 levels.
Q: The Bank Nifty is fallen quite a bit over the last few days. How are you looking at the big ones there like State Bank of India (SBI) or ICICI Bank?
A: In the rally that we had Bank Nifty played a significant role. In fact, all banks played a significant meaningful role per se. So, when there is a pullback, these stocks are correcting quite a bit.
For example, SBI has come down from around Rs 2,250 levels during policy meet to around Rs 2,120 levels. We think it should consolidate at these levels and maybe marginally go up if there is a relief rally.
But traders and investors can sell 2,300 Calls at around Rs 4, so that translates to around Rs 600 of inflow on a margin deployed of Rs 30,000. So, 2 percent absolute return in a week and losses will start if SBI starts trading above Rs 2,300 which is around 8 percent from current levels.
For the complete interview watch video..