Don't see major correction; buy on dips: Angel Broking

"We are contemplating is that don't expect a major correction despite currency depreciating. Buy on dips is the strategy ," he said in an interview to CNBC-TV18.

One can buy 5,300 call option and hold on for three-four trading sessions to make profit, he added.

Below is the edited transcript of Bhamre’s interview with CNBC-TV18. Also watch the accompanying video.

Q: How are you calling it for the Nifty now in the near term?

A: We have been seeing that how correlation between euro and equity markets has been working. The depreciation in euro was leading fall in equity markets globally. But last week we have seen that euro has depreciated but despite of that some of the markets including ours have been outperforming the other peers and reason being the liquidity which is getting poured into our market. It is very important to understand where exactly the liquidity is coming.

More than index futures or stock futures the liquidity is coming into cash market segment, around more than Rs 3,000 crore liquidity has come in last six-seven trading sessions barring the block deals which have happened. At the same time more than 4,000 crore of index option buying has happened and the put call ratio it has come down and implied volatilities are very low and we are seeing built-up in call options of 5,200-5,300-5,400 call options happening.

The case in point yesterday also we saw somewhere around 700 crore of index options buying. Most of the built-up was seen 5,300-5,400 call options and all these are FIIs. So these guys are bullish irrespective of what currency movement is happening. Rupee has been depreciating despite that market has been holding.

So what we are contemplating is that don't expect a major correction despite currency depreciating. Buy on dips is the strategy. Because of this deviation people are uncomfortable we would strongly suggest to buy at the money call options of Nifty.

The case in point 5,300 call options yesterday closed somewhere around 64, today if the market is 5-10 points here and there, if it is down then you can get that call option for around Rs 60. We would suggest buying that call option and hold on for three-four trading sessions to make profit in that. Our biasness continues to be positive and we are suggesting not shorting this market.

Siddharth Bhamre of Angel Broking continues to be positive on the market and suggests that one should not short at this point in time.

"We are contemplating is that don't expect a major correction despite currency depreciating. Buy on dips is the strategy," he said in an interview to CNBC-TV18.

One can buy 5,300 call option and hold on for three-four trading sessions to make profit, he added.

Below is the edited transcript of Bhamre’s interview with CNBC-TV18. Also watch the accompanying video.

Q: How are you calling it for the Nifty now in the near term?

A: We have been seeing that how correlation between euro and equity markets has been working. The depreciation in euro was leading fall in equity markets globally. But last week we have seen that euro has depreciated but despite of that some of the markets including ours have been outperforming the other peers and reason being the liquidity which is getting poured into our market. It is very important to understand where exactly the liquidity is coming.

More than index futures or stock futures the liquidity is coming into cash market segment, around more than Rs 3,000 crore liquidity has come in last six-seven trading sessions barring the block deals which have happened. At the same time more than 4,000 crore of index option buying has happened and the put call ratio it has come down and implied volatilities are very low and we are seeing built-up in call options of 5,200-5,300-5,400 call options happening.

The case in point yesterday also we saw somewhere around 700 crore of index options buying. Most of the built-up was seen 5,300-5,400 call options and all these are FIIs. So these guys are bullish irrespective of what currency movement is happening. Rupee has been depreciating despite that market has been holding.

So what we are contemplating is that don't expect a major correction despite currency depreciating. Buy on dips is the strategy. Because of this deviation people are uncomfortable we would strongly suggest to buy at the money call options of Nifty.

The case in point 5,300 call options yesterday closed somewhere around 64, today if the market is 5-10 points here and there, if it is down then you can get that call option for around Rs 60. We would suggest buying that call option and hold on for three-four trading sessions to make profit in that. Our biasness continues to be positive and we are suggesting not shorting this market.

Q: How would you trade Canara Bank ?

A: We have been observing that there has been good amount of shorts which are still standing in Bank Nifty. That’s the reason that after Nifty breaching that 5,150-5,200 resistance zone post expiry on Friday Bank Nifty has been outperforming. We have seen days when Nifty has been flat and Bank Nifty up by 0.75-0.8% sometimes 1%. We believe this outperformance may continue for some more time.

At the same time when Bank Nifty was rallying due to some formation of long positions and short covering, midcap banks have seen huge formation of long positions in last fortnight or so since the beginning of this expiry. Last two days correction has been because of long unwinding.

So this is basics of derivatives that whenever a stock corrects because of long unwinding and goes up because of formation of long position that’s buying on dips, so midcap banks have corrected.  We like number of banks like Allahabad Bank , Bank of India , Indian Overseas Bank , Union Bank of India , Canara Bank, Dena Bank .

But looking at the cash based volumes and the kind of unwinding we have seen in last two trading sessions Canara Bank is a good buy. One can create long positions at current levels for the target at Rs 451 and stop loss at Rs 414.

Q: You are buying Chambal Fertilisers and Chemicals today?

A: I am not sure about the exact news, but it was related to gas because of which Chambal Fertilisers corrected. Huge formation of long positions along with cash based buying seen in cash market before last trading sessions and stock has rallied from Rs 75 to Rs 81-82 where it had resistance.

Though yesterday’s fall was a 5% correction look at the futures volume, look at the cash volumes it is no where near where the formation of long position happening and volumes were very high. So such patterns and derivative data suggested that it is buying on dips stock.