Sep 12, 2013 03:35 PM IST | Source: CNBC-TV18

Midcaps may see action now; 6K level to continue: Nomura

Tushar Mahajan of Nomura believes there might be more action in the midcap space now but on the largecap side, there will not be much of an upside.

Tushar Mahajan, head of listed Futures & Options (India), Nomura expects Nifty to be around 6,000 on the upside over the next 15-20 days. He believes the 50-stock index will find support at around 5500 on the downside.

“We might just move around 6,000-6,020 levels. At an index level, we are largely done with the move,” he says in an interview to CNBC-TV18.

Also Read: Nifty may breach 6000, hold long positions: Hemant Thukral

Going ahead, he believes there may not be much upside in largecap stocks but one might see more action in midcaps. According to him, if rupee stablises at 63 against the dollar, there may be some profit booking in the IT sector.

Meanwhile, Mahajan confirms Larsen and Toubro (L&T) as his top pick in the industrial space.

Below is the verbatim transcript of Tushar Mahajan's interview on CNBC-TV18

Q: Do you see more upside beyond this 5,900 zone?

A: We have seen a massive volatility, a bout of almost 600-700 points on the downside and then running up back to 5,900 levels. From hereon, healthy trading implies that market needs to consolidate this phase. There are not many people who have made money in this upmove. So from a trading perspective, we should consolidate but it’s just that.

You might see more action continuing in the midcap space but on the largecap side, I don’t think we will have too much of an upside. We might just drag around, move up to 6,000-6,020 levels. At an index level, we are largely done with the move.

Q: Where does the base for this market stand now?

A: With the kind of panic situation sometime in August with all those tightening measures we did see levels like 5,300. Though, the base for this market should be around 5,500 odd levels and below that it is the panic zone, which is an opportunity for people to buy.

We would look at a stop around 5,500 odd levels and 5,900-6,000 is pretty much on the top over the next short-term. Just adding a disclaimer to that, we have a big event coming up next week on the FOMC, which is being watched by everyone globally. So, if Fed says that tapering is over, you will see a knee-jerk reaction to both the currencies and markets in emerging markets and we will not be spared in that case.

Q: Will you play this market through options by any way, any strategy that you would have for the rest of September series?

A: It is a bit risky because we have seen strong moves but one has to take advantage of the fact that we have the volatility index (VIX), which is at a fairly elevated level and you could make some reasonable premium out of it.

If VIX indices continue to trade around 30-31 levels, I would probably look to sell some strategies. The range we are talking about is 6,000 on the upside over the next 15-20 days and 5,500 on the downside. So, I would probably look to sell these straddles here and make some premium of it.

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