Atul Badkar of Edelweiss Securities expects Nifty to be in a tight range of 5,150-5,350 in the May series. He doesn't see the market making any big decisive moves unless clarity on GAAR emerges, he said in an interview to CNBC-TV18.
He expects Nifty to find strong support at 5,180 mark. "The eventual support will be closer to 5,121, which will be the 200 DMA," he added.
Below is the edited transcript of Badkar’s interview with CNBC-TV18. Also watch the accompanying video.
Q: How are you seeing the May series now for the markets and what's the call on the Nifty?
A: For this entire May series, it looks like we are going to be stuck in a very tight range. By and large, the range will be between 5,150 and 5,350. From the February high of 5,630 on the spot, we have noticed that 5,280 is one resistance, which has just extend that trend line. This 5,280 seems to be an area of multiple resistance and we have been struggling to get over that level.
Having said that, 5,180 looks like a very strong support. The eventual support will be closer to 5,121, which will be the 200 DMA.
In this entire area simply because the activity in the F&O space is quite muted, very simply if you look at the open interest on the options the 5400 and 5600 calls is where the highest open interest is, its about 4.5 million shares. On the puts it’s all the way from 5,000-5,100 and 5,200, which is about 4.5 million shares roughly at each strike.
Yesterday, we have seen some additions in the 5300 call about close to 600,000 shares and the 5,200 put that’s again close to around 700,000 shares. So, the broad idea is that this market doesn’t look like it’s going anywhere immediately unless and until you get some more clarity in the parliament session on how GAAR will pan out. A lot of active F&O players have been out of the space. So it’s a wait and watch, but by and large 200 points is where I think the broad range will be
Q: What about the Bank Nifty, what is the trading call there?
A: The banking space is one area where we are the most bullish. The underlying bullishness in the market is still there. The overall trend still looks like we are positive because we have not broken the lows that easily. If at all you see any up move to the markets, the banking space will move first.
Within the banking space, ICICI Bank to certain extent State Bank of India, Axis Bank, these will perform better. I still prefer staying with the large caps and if you are looking at a trading perspective than at every dip you may want to accumulate some of these banks.
Q: You have got a strategy on Hindustan Unilever (HUL)?
A: This stock particularly has been showing inherent strength for quite a while now. The results have been quite alright. We have seen some short covering in that space followed by some fresh longs going in on the futures. At around Rs 425 where it’s currently trading, a Rs 450 is quite easily getable. You can keep a stop loss about 3% lower. On charts as well, our technical analysts feel that this stock can go easily about 5-8% higher from here.
Q: Maruti was very weak yesterday, do you think there is more downside in that?
A: We have seen some fresh shorts happening in this stock. This stock has particularly shown good amount of strength over a good period of time and from here onwards we feel that the upside seems to be limited. It may be not immediately, but as the stock moves higher from Rs 1,330 say around Rs 1,340-1,345 you may want to start creating some fresh shorts for a target of about Rs 1,290.
Q: What's the call you would take on a bank like ICICI Bank now?
A: I am inherently quite bullish on this one. It has shown some good amount of strength with some fresh longs coming in and on charts it is looking good too. From current levels you can look at going long for a target of about Rs 915-920. You can keep a stop loss 3% below.
One may not want to take that long call immediately simply because the index itself seems to be stuck in a range. The moment we get some comfort that the index is moving higher so you can look at going long there. Otherwise you can look at waiting for it to decline a bit more may be 1-2% and then taking a long call on this one. But with the banks, ICICI Bank particularly is one of our top picks from a short term trading perspective.
Q: Have you seen any long addition in the telecom space or yesterday was mostly about shorts covering positions?
A: The entire telecom space has by and large been muted where investors are not really taking any fresh long positions. Amongst Idea, Bharti and Reliance Communications, Reliance Communications is a little more volatile. So, from a trading perspective, one may not want to take any positional call in these stocks simply because of lack of clarity on regulations. We don’t know which side stocks will move or what will happen, but from a valuations perspective yes you can look at accumulating these stocks may be on dips but the perspective is clearly 3 months or much beyond that.