Buy 5200 put option in May series: Angel Broking
Siddharth Bhamre of Angel Broking says that there is no cushion of volatility coming into the market unless there are negative cues from global markets. We continue to remain bearish on the market from short term perspective in May.
Siddharth Bhamre of Angel Broking says that there is no cushion of volatility coming into the market unless there are negative cues from global markets. He remains bearish on the market from short term perspective in May.
Below is the edited transcript of his interview. Also watch the accompanying video.
Q: How are rollovers and how do you see the beginning of the May series?
A: According to our analysis, lot of rollovers took place yesterday on expiry. FIIs took the advantage of S&P downgrade announcement and utilised this volatility to rollover their positions. Yesterday, there was 17% rise in open interest of FIIs index futures. Nifty open interest rise is 10% and the Bank Nifty has shown 17% rise across the market.
In open interest, there was unwinding in April and increase in May which indicated that fresh positions have been formed and rolled over taken place in May series. We expected a flat session throughout the day. Most of the stocks have shown good rollovers in percentage term. The least rollover was in Hero MotoCorp above 50%. There is no cushion of volatility coming into the market unless there are negative cues from the global markets.
We continue to remain bearish on the market from short term perspective in May. Yesterday, we have initiated buy 5200 put option in May series.
We don’t see liquidity returning into the market. Cash base selling has started.
It is quite possible that long-only funds are exiting and ETFs are coming. That itself is a negative.
At the same time, IVs are very low and are not sustainable at these levels. In May series, 5200 put option IV is quoting at 17.5, which is quite low. This put option can be initiated as long and we expect market to come down to 5050 levels where we would reassess the view on the market. Buying 5200 put option can be strongly advocated.
Q: Which stocks do you advice going short on now?
A: I would stick to index and place my bet where there are more shorts.
Nifty open interest from series to series is declining and on the other hand the Bank Nifty open interest is increasing. In the banking space, ICICI Bank, is one stock to short on. We have seen good amount of short built up taking place in Bharti, L&T and BHEL.
SBI stock has done well in last series. The entire rally from 2100 support level to 2300 plus level was as a result of short covering. We are concentrating on stocks which have gone up only because of short covering and SBI is a prime candidate. So, I would not just concentrate on short built up, I would also see where the open interest is.
Q: How will you approach L&T and BHEL in May series?
A: BHEL has a strong support at Rs 230-235 and some bounce back can take it to Rs 240-245 level. Good amount of short positions can be initiated with target around Rs 210. I believe this support may be breached. One can form a hedge call in L&T, where one can buy at Rs 1,250 call option and short future for a target of Rs 110 in May series.
A: I am not tracking Hexaware very closely. I am positive on IT sector and Wipro is one of our top pick in the sector. We had initiated Wipro at Rs 415-420 for a target of Rs 438 and it did quite achieve its target before the results. Wipro is a good buy at Rs 395. We initiated short at Tata Motors for Rs 285-290 and went horribly wrong. We are still seeing lot of positives and built up happening in that counter. I would wait for a shorting opportunity but I don’t know when.