In an interview to CNBC-TV18 Siddharth Bhamre of Angel Broking shared his outlook on futures and options market.
Below is the verbatim transcript of Bhamre's interview with CNBC-TV18.
Q: The long trade has not quite worked out. What are you telling your clients to do now for the March series?
A: Yes, the long trades have not been working and hence at such lower levels converting long calls into short would again be a disaster here. Few things, which are still stopping us from going short in this market is euro-dollar equation, 1.3 is good support and crude around USD 89-90 per barrel West Texas Intermediate (WTI) is good support.
These are barometers of liquidity and equity markets. It is quite possible that either these indicators might take support at current levels and show some bounce, which would trigger probably some bounce in emerging markets like ours. Therefore, we are not shorting as of now but if asked whether I am going long at this point of time then I am confused whether I should go long or not because this bounce may or may not be beyond 100 points.
However, in such circumstances when Calls are not going right on the market index, one should stick to stocks. We have identified lot of stocks wherein long shorts can be made. Defensives; one can go long, which have corrected from higher levels. On market front one sign of hope is that index Futures Foreign Institutional Investors (FIIs) have gone bit long and they have bought Put options ranging from 5,700 to as low as 5,300-5,400 levels. So, it is possible that the last two weeks carnage, significant falls, which have happened in market that may not happen. Therefore, some traders might cover their short positions, which might give a bounce to a market of 70-100 points and then it would be a Call, which one has to take whether one has to continue with longs or to go short at higher levels. Till then when things are not working out we are adopting stock specific approach.
Q: Yesterday stock Futures lost nearly 8.5 crore shares in open interest. What exactly is happening at individual stock levels in your market? Is there huge shorting pressure, are people unwinding the small longs they had on trades?
A: I would like to answer the NHPC thing also. We have seen huge unwinding of 37-38 percent and stock corrected around 23-24 percent. NHPC is widely held stock so if selling comes that selling should have been observed by people who are interested in buying this stock. If one look at the news, which is coming out that 3 crore shares have been sold by xyz party because of financing issues.
The average volume in NHPC on any normal day is around 2.5-3 crore shares. So, why would any sane person who holds 3 crore shares would make such a big impact and sell his entire stock in two-three days timeframe? Therefore, it is more than what is meeting the eye in NHPC. We can understand in other midcap name, which is not widely held going down this way so one can stay away or think of accumulating around Rs 18.18.5 level NHPC.
Coming to the question, there is lot of covering, which has happened in few of the largecap names like ICICI Bank where we are suggesting going long. Yesterday we did see some kind of built-up but rollovers have happened quite less in most of the counters and that is why the reason one is seeing that the open interest in stock Futures is coming down. There are lots of other stocks, which have gone down and have reduced their open interest. There are some stocks, which have bounced and have reduced open interest. So, the very negative stance, which people had on infrastructure space, some of the capital goods space, which have reduced open interest yesterday, has resulted into the figure, which you are mentioning.
Q: You have a strategy on ICICI Bank?
A: Yes. The rollovers were not great in ICICI Bank and we are seeing some formation of long positions, in fact ICICI Bank is the only stock in largecaps, which is a non defensive stock and seeing some long built-up. Therefore, in a range of Rs 1,040-1,050 one can go long though we are not expecting a huge bounce but around Rs 1,100 the stock might go. One can fix a stop loss of Rs 1,013 and stay positive in ICICI Bank.