Hemant Thukral, Aditya Birla Money in an interview to CNBC-TV18 spoke about strategies in Futures and Options market.
Below is the verbatim transcript of his interview:
Q: How much do you think the market can extent itself on the upside because of the good cues that we have? If you are long then where would you maintain your stop loss now?
A: I don’t think much has changed in the data points from the last time I was here. The foreign institutional investor (FII) flows and the way the Put writers have been extending confidence still persists, so I don’t think the bullish, undertone should change. My first target for Nifty would be around 6050, so I will maintain my long positions. For people who have been on the long side, stop loss should be 5850.
However, if today is a gap up opening towards 5990-5980 as the SGX is suggesting then people who are going long today should keep a stop loss of 5930-5950 because below that -that would mean at least Nifty will retest 5850. But for people, who have been staying long, have deliveries should not sell till the Nifty goes below 5850 and continue to trail on the positive side. I have a feeling that after the first target of 6050, we have to see how market reacts.
One more point is that an equivalent number in Bank Nifty would be 10,500. If Bank Nifty crosses 10,500 then we are heading towards 11,000 in Bank Nifty then we may have to revise Nifty numbers towards 6100 or 6150 on the upside.
Q: One trading tip before the pre-market numbers come in?
A: I would like to go long on PSU banks, especially the midcap PSU banks – something like an Oriental Bank which has given a fresh breakout above Rs 159-160. So keeping a stop of Rs 152 I will be going long and having a target of Rs 175.
However, all midcap PSU banks are showing strength so another 5-10 percent is expected to come in a few trading sessions itself.
Q: Any trades on the banks – IndusInd Bank up 3 percent, ICICI Bank up 3 percent, Yes Bank is up very smartly, UCO Bank, Union Bank – any trades at all?
A: I prefer the midcap PSU Banks clearly for two reasons – the way the delivery based buying has been happening especially on the midcap front. As you mentioned, Union Bank, Syndicate Bank – I would go ahead and even say Oriental Bank of Commerce, UCO Bank all have done good.
In OBC a good run-up is still left, so it could see levels of Rs 175-180. I would rather look at the madcap side of the market.
For me, if the Bank Nifty crosses 10,500 and sustains above it, I think 11,000 should be watched out for on it.
Q: Can you buy protection at all for Ranbaxy Laboratories?
A: I would rather say that people must have been caught by surprise. If one checks the last two weeks data, 29 percent open interest is on the positive side and that is clear to see unwinding. For 400 Puts there were huge Puts written, they will also try to cover. So, I really feel this is a reaction because of the long positions that were being built up and the people just reacting to news.
I don’t think it will be very easy for Ranbaxy to settle, though Rs 340 -325 is a very good base. However, let us see how it reacts once it reaches that but the over reaction is because of the huge long positions. Also because it is a complete outperformer and as I said 400 Put writers were also very aggressive. So everything has added up to Ranbaxy and led to this reaction.