Hemant Thukral, Aditya Birla Money shared his reading on where the Nifty is headed in the June series and how one should play it.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: How do you think the market is stepping into the month of June- can the Nifty continue on the uptrend or are you getting cautious?
A: If we analyse the way the data is shaping up for the next series, I think after a very volatile May series and the way it has oscillated between the lows and highs, finally we will be having a month of slight consolidations. If one sees the way the Put writers have accumulated the position in June, their main bet is 5,950 and 6,000. That 50 point support zone, if it continues to hold then the Call writer zone is only above 6,200.
So, if one is taking a positional call, and see some profit taking today, then one should go long around 6,030-6,050 levels. Keep a stop loss of 5,950. We may retest 6,200-6,210 in the early part of the June series.
However, the way the individual stock rollovers are happening, it clearly suggests that it is more of a stock picking market. So, a slight consolidation may continue but I still hold a positive bias till Nifty is holding above that 5950-6000 levels.
Q: The Bank Nifty has been a bit of a laggard through the May series – do you see that providing any leadership in the early part of the June series or that is not where you are seeing the biggest build up happening?
A: That is actually the worrying spot. Bank Nifty is a laggard and even if one checks the rollovers, especially on the PSU banks side they are not suggesting the same strength. Whether it is State Bank of India, Oriental Bank of Commerce, Punjab National Bank - these banks which are trader favourite banks are not showing that strength.
The rollover strength still continues with the private banks something like an ICICI Bank or a Yes Bank. I still feel that unless and until the PSU Banks participate it will be very difficult for Bank Nifty to cross that 13,000 level because that is the crucial benchmark level for me. I will only be interested in buying Bank Nifty if it crosses 13,000 on the upside otherwise it will actually be putting pressure on Nifty rather than helping Nifty.
Q: You are bullish on Dr Reddy’s Laboratories this morning – how are you playing that because pharma was very active yesterday?
A: Pharma sector is again showing signs of good rollovers. I am not keeping a stock like Ranbaxy where the rollovers have not shown any strength. But stocks like Sun Pharma, Lupin, Dr Reddy’s are showing good rollovers.
Sun Pharma has already shown a very good move yesterday. Dr Reddy’s has a move due and technically, this stock has crossed that Rs 2100 zone which was acting as a stiff resistance, so it should move up to Rs 2,175-Rs 2,180 in immediate short-term. For the trader who is going long in this should keep a stop loss around Rs 2,070-Rs 2,075 which is a 20 day moving average. I think till it holds above it, the stock is good to move up from here.
Q: From infrastructure you are going with Bharat Heavy Electricals Limited (BHEL) – you think there is more upside in this pullback?
A: There are two reasons why I am going with BHEL. One is the rollover cost, the way the rollovers are happening and it always has a declining or a negative cost as we move forward to the next series. This time the Futures to the next month are absolutely flat and the rollovers are very encouraging. They are clearly telling that long positions have been rolled.
BHEL is forming a very strong bottom around that Rs 195-196 mark and it has again crossed that Rs 200, where the 50 day moving average was acting as a resistance zone.
In immediate short-term we will see it revisiting 200 day moving average (DMA) and I expect it to do that in the next one week. So, the target is Rs 216, where the 200 DMA is there. One should keep a stop loss of Rs 196 on this stock. It should do good in June series.
Q: Which are the heavy weights on which you are seeing a short rollover into the June series?
A: In real estate stocks, I see a sharp shorts being rolled, in stocks like DLF, IndiaBulls Real Estate, Housing Development & Infrastructure Ltd (HDIL). Infrastructure stocks like IVRCL, GMR these are not suggesting good rollovers and the PSU banks is the third sector where I am slightly worried. The leader State Bank of India is suggesting good shorts being rolled into the next series so that is the main concern area for me.
Q: What kind of positions did you see build on Tata Motors yesterday. Were people building any kind of hedge or are people mostly long on that stock?
A: People were expecting good results because if one sees both the rollovers and the positions for day, they were on the long side. It is not the people were expecting extraordinary results but rollovers were already on the long side. So, I think auto as a sector is going to do fairly well.
Hero MotoCorp and Tata Motors have the best rollover cost. Today, Tata Motors will move up but it is important that it crosses Rs 320 because June series Call writing is heaviest at Rs 320. Once it crosses Rs 320, we will see another Rs 10-Rs 15 flare up from there.