The Indian market has been rangebound for a long time now. In an interview to CNBC-TV18, Siddharth Bhamre of Angel Broking says the Nifty may breach the resistance level of 5,450 in the September series. "You should continue to hold on to your long positions and buy on dips," he adds.
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Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.
Q: How you should be approaching the Nifty, after the sell-off that we saw last night?
A: I do not think that should be called as a sell-off. It has been quite a subdued session with slight negative bias. The liquidity, which is coming, has been encouraging. Last Tuesday, we were pointing out that how the liquidity parameters like euro versus dollar, US bond yields, crude oil price movement were supporting that the long unwinding, which was seen by FIIs, may not continue for long.
There is a dilemma between two options. First, you are seeing slowdown in China, you are seeing unemployment number in US rising, you are seeing slowdown in US, recession in Europe, and other developed countries like Australia are also seeing a slowdown. But instead of reacting negative to this news, the market is staying where it is. We are seeing FIIs buying. Reason for this is most of the participants are thinking because things are not working out, there would be a stimulus. That is the reason you are seeing that liquidity is coming into all the emerging markets where growth rate is still there.
If I look at our internals of derivatives, FIIs yesterday have unwounded 7-8% of their index futures position. That is slightly bothering though it is not a signal where we would go and initiate short positions. You might see a correction. That might be not more than 50-60-70 odd points. So, do you go short on this correction? The answer to that is no, if you are a positional trader.
The market remains buy on dips market. If you are an intraday trader or you are bearish then you can think of buying 5,300 Put options for a day or two, but not beyond that. At the same time, if I look at the options data, strike price of 5,600 and now 5,700 is also getting active. That indicates that probably market may think of going towards those levels. So, we believe that in September series you might see the breach of that important resistance level of 5,450. You should continue to hold on to your long positions and buy on dips.
Q: You have a sell call on Infosys today.
A: We are not very optimistic on the stock. Rs 2,450-2,500 was a strong resistance. It has closed marginally above those levels. The entire rally from Rs 2,100 levels to current levels was mainly because of short covering. In between, around Rs 2,350, we did see some long positions.
We believe that the stock is light now. You might see fresh shorting happening at higher levels. So, at current levels, one can go short. We are expecting the stock to correct till Rs 2,380. You can probably fix a stop of Rs 2,548 and go short on Infosys.
A: I will avoid L&T. For BHEL, Rs 185-190 is a strong support. We have seen huge formation of short positions in BHEL. So, I will be a buyer on dips in BHEL.
I think a bounce back has happened in Bharti Airtel, but we are not seeing any significant upside above Rs 280 odd levels. So, if and only I see Bharti back to Rs 250 or sub Rs 250 odd levels then probably we would buy over there. But I do not see a significant upside in Bharti.
Q: JP Associates has lost 13-14% in the last fortnight. How would you trade in that particular counter now?
A: It all happened after one MNC broking firm recommended sell on it. There is one equally strong MNC broking firm that has a target of Rs 111 on JP Associates. We did recommend to buy around Rs 60-62. That is a good support level. This stock has too much of short positions. The nature of short positions are also quite huge.
No fresh shorting should be recommended. If you are an intraday trader or probably a day or two day trader and if you are happy with Rs 1-2 rupee move then short. But probably if you are a positional trader then any levels below Rs 64-63 is a good buying opportunity in JP Associates. We are expecting a bounce back to Rs 74. So, we are again buyers in this stock on dips.
Q: Which is the sugar stock that you are most bearish on now?
A: Two things have attracted my attention towards Balrampur Chini. One, there were list of stocks were announced that they would go out of F&O segment. A lot of hue and cry had been made that there would be an unwinding; there would be a lot of cash market buying or selling pressure. But nothing happened then. Now, at the end of September series, these stocks will be moving out, not much has been spoken about it.
Most of the counters have reduced significant open interest. But there are a couple of counters including Balrampur Chini that has added 17% open interest after the announcement that the stock is going to move out of it. So, there are too many long positions, the stock has bounced back from lower levels.
Second, I am not a fundamental analyst, but people are saying that production might come down and the prices might go up. That would benefit them, but what about the production loss. So I believe current levels or till Rs 71-72 are good levels to go short on Balrampur Chini. We are expecting a target price of probably Rs 63 or much beyond those levels. So, Balrampur Chini is a high risk, high return trade for us. We are going short over there.