In an interview with CNBC-TV18, VK Sharma of HDFC Securities, spoke about his reading of the market and his outlook.
Below is a verbatim transcript:
Q: After the expiry yesterday, what is your orientation for the February series at least for the first part of it?
A: I think one has to trade with caution now because we have had six consecutive months in which all the settlements were positive. The highest that we have ever had in history is seven consecutive months happened between July 2006 and January 2007.
The chances of Mr Chidambaram pulling out a rabbit is bordering on the enthusiasm. My sense is, one needs to be cautious. One need to take a call that probably the Nifty could give away to the extent of 150-200 points at the most and use those dips to buy and rallies to sell, that is going to be our strategy. You continue to hold the better private sector banks.
Q: You have a strategy on Punjab National Bank (PNB)?
A: If you look purely at derivatives data, you will find that positions were built on the longer side yesterday and the stock price also went up after the results.
My sense is that, the draft guidelines that have come will hit PNB badly. Therefore, I have a call of caution here. Investors who are holding this stock, can consider buying the Put in case of PNB. My suggestion here is, you buy 900 Put at around Rs 23 with a stop loss of Rs 15 and hope to sell it at around Rs 45 if you are just trading. However, for a precautionary purpose, one should continue to hold on till one gets some more protection.
Another bank, which could be hit, is Andhra Bank. PNB has a restructured portfolio of around 10 percent of its loans and Andhra Bank has the highest. So, my sense is buying a 110 Put in Andhra Bank at around Rs 2.2 would also do the job and with the stop loss at Rs 1, one can hope to sell it at Rs 6.
Q: A couple of mid-caps did quite well yesterday, you like Tata Global Beverages from that list?
A: Yes, Tata Global Beverages is a favourite fundamental stock as well. We recommended it at around Rs 130, it went up to something like more than Rs 180 and now it has come back again at around Rs 149-150.
My suggestion here is, to buy 150 call at around Rs 5. Yesterday it closed at Rs 6.5 so maybe there is some discretion in terms of buying and one should hold on till the current settlement. If the general market takes some kind of a correction, I think this is a sector which could do well.
Tata Global Beverages results were bad but I think that is already into the price.
Q: You have a strategy on Larsen & Toubro (L&T) today, how you are playing that?
A: L&T continues to weaken. Yesterday also, despite being the last settlement day, the stock closed lower. Positions still continue to be added on the shorter side. So, I am suggesting buying 1,500 Put at around Rs 22 with a stop loss of Rs 10 and hope to sell it at around Rs 50. I think this space continues to weak.
Q: You are quite bullish on Hindalco?
A: Yes. We like Hindalco purely from a perspective of the positions that were built yesterday 4 percent on the longer side. The stock went up. Normally, I do not put a lot of conviction on what happens on the last day of the settlement but the fact is that it has fallen a lot. So although, I am suggesting buying 120 Call option that closed at Rs 3.75, I am suggesting to buy it at around Rs 3 with a stop loss of Rs 2. So, Re 1 is at stake. If this punt goes right with Re 1 stop loss, the possibility is that you will make around Rs 5 when you are able to sell this Call option at Rs 6.