In the last month and a half we saw that for the Nifty to cross 6100 level is very difficult. It attempted for that various times and it is taking incremental dollars to move the market higher. In an interview to CNBC-TV18, Atul Badkar, VP, institutional equities - derivatives desk, Edelweiss Securities said that it is a buying opportunity over the next few trading sessions as we move lower. "I do not think it is a breakdown", he adds.
Also read: Have patience, Nifty will move soon: Sukhani
Badkar strongly feels that we will consolidate and spend some time here, but the levels for the next week or for next 15 days will be between 5850 and 6000.
Below is the edited transcript of his interview to CNBC-TV18
Q: After the disappointing price action how are you calling the rest of the February series?
A: We have a similar view. The last few days of trade has very clearly given some sort of a breakdown. We feel that over the next few days there will be consolidation. We do not think we are moving up in a hurry. In that last month and a half we have seen that 6100 level is very difficult to cross. It has attempted that various times and it is taking incremental dollars to move the market higher.
Although one can see a lot of positive Foreign Institutional Investor (FII) flows in the whole of January and in February. However, till date there is good amount of selling from domestics simultaneously. At around 5950 levels it is close to the 50 day moving average. If this was to break, the next 100 points can come very quickly.
Over the next few trading sessions as we move lower, it is a buying opportunity, because I do not think it is a breakdown. It is not a structural breakdown where we can go down 200-300 points that easily. We will consolidate and spend some time here, but by and large the levels for the next week or maybe next 15 days will be between 5850 and 6000.
Q: What kind of position build-up are you seeing on National Thermal Power Corporation (NTPC) and are you going in with a strategy?
A: Not really. Today is the big day for NTPC. We feel that fundamentally we are quite bullish on the stock. We do not know exactly where it closed yesterday, the flash said Rs 145. We think that it can be slightly higher, because investors seem to be interested in the stock. This is not a trading bet for sure.
So, NTPC is not a high-beta stock where one can go in and come out very quickly. This is accumulating on dips. Fundamentally, we are quite bullish on the stock. Irrespective of the offer for sale (OFS), this stock can be taken from a positional bet. We can easily get about 15-20 percent upside from here for the next 6-12 months.
Q: From the Public Sector Undertakings (PSU) basket are you negative on is Bharat Heavy Electricals Limited (BHEL)?
A: In the last few trading sessions the entire capital goods space has very clearly broken down including BHEL and Larsen and Toubro (L&T). BHEL’ price action is very clearly showing that this stock can go down another 5-8 percent very quickly.
It is in that momentum of falling lower. So, if one shorts the stock even from current levels around Rs 195 is what is gettable. One has to have of course a very strong stop loss. So, 2 percent higher and you will need to cut your shorts. However, BHEL and L&T both look weak in the capital goods space.
Q: You have also got a strategy on Power Finance Corporation (PFC)?
A: Post the results we have very clearly seen a very interesting price action on PFC. The stock was up close to 4 percent yesterday and the momentum should continue. On valuations and fundamentally also our analyst has given a buy call on PFC.
Over the next few trading sessions we can very quickly get a 5-8 percent upside. We have seen open interest built up on the long side. I do not see any reason why that should stop. Technically we have a target of about 5-8 percent higher very quickly.