In an interview to CNBC-TV18, Hemant Thukral, Aditya Birla Money shared his readings and outlook on the Futures and Options market.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: First a word from your end. We had a disappointing session on Friday but this morning seems like things could get better. How would you approach the Nifty?
A: There are three-four very important data points that I could see on Friday. Firstly, putting both the last Thursday and Friday sessions together, FIIs are not buying any more Nifty futures now. In fact they have been sellers though the selling has been very marginal but they are not buying Nifty futures at higher levels.
Secondly, post Friday, we saw some serious shorts creeping in the financial and the banking sectors. So both finance and banking started to show some shorts coming. Banking and finance have carried this rally. So I have a feeling that around 6,030-6,050 levels, we may again start to feel the fatigue coming in Nifty in this run up.
So, post today’s gap up one should try to buy 5,900 Puts which closed around Rs 70 on Friday. It could open down as well and may open around 5860. Keep a stop loss of 6,050 on spot Nifty. I expect Nifty to retrace back to 5,900 and 5,850 levels where now it has found a very strong support. I am not expecting it to break below 5,850.
However, small profit taking in next one week or at least in the two-three sessions cannot be ruled out.
Q: For the week, the Bank Nifty is down about one percent. How would you approach trade over there? What kind of levels are traders looking at in terms of downside?
A:, Bank Nifty was basically taking Nifty along. We have seen fresh shorts in some of the heavyweights. The, Bank Nifty has also started showing signs of weakness on Friday. To avoid this weakness, it has to cross back above 12,750 and show some serious strength.
Otherwise, if it breaks below 12,200, there will be more weakness and it may revisit 11,750-11,800 on the lower side. So the next one or two sessions are very crucial for Bank Nifty and if it fails to cross 12,700 then we may be retracing back to 11,800 first.
However, the level to be watched is 12,200 and the moment it breaks below that selling pressure will intensify.
Q: You have got a trading strategy on Bata India. How are you playing that?
A: This is one sector which has started seeing a very good open interest on the long side. If you see the other stocks also in this sector like a Dabur, Bata, ITC - all have accumulated huge long positions.
Bata especially has managed to cross above that Rs 735-745 mark, which was acting as a stiff resistance for it. Technically, as well Bata is looking very strong now and the immediate target could be above Rs 800 levels. So around Rs 820-825 there is next major resistance zone for Bata. The way open interest has been added up on Friday, we have seen seven percent fresh long open interest being built up.
So, one can keep a stop loss at Rs 745 and form fresh long positions today.
Q: We saw a lot of the rate sensitives cool off on Friday. Would you continue to sell into something like State Bank of India (SBI)?
A: SBI is a typical banking PSU largecap. It has seen fresh shorts being built up. Importantly, the Future of SBI has closed below Rs 2,200. It was taking support and had managed to cross that 200 daily moving average (DMA) mark, around Rs 2,195.
So, till it stays below that Rs 2,200 mark, there is a full chance to retest Rs 2,050. This is a slightly longish target but SBI should slowly and steadily retrace back to these strong support zones.
However, one has to keep a stop loss and so I would be keeping a stop loss around Rs 2,250-2,260 zone.