Expect some bounce back till July series expires: Bhambre

Though the direction of market is not very clear at this point of time, his outlook is not very bearish. He expects to see some bounce back in the Nifty till the July series expires.

One can buy at-the-money call option of 5,100 around Rs 35-40 and can make money on that, he suggested.

Below is the edited transcript of Bhamre’s interview with CNBC-TV18.

Q: What would the approach be on the Nifty after the slide we saw yesterday?

A: After seeing last night Dow futures around 210-215 points down and now early in the morning seeing Dow close 101 points down, so I don’t think we would fall significantly or we won’t continue to fall. At the same time, SGX Nifty is indicating 15-20 points upside.

There is not enough short in the system, which would start getting covering so we should expect a big bounce. I don’t think that kind of scenario is there in market as of now. Yesterday there wasn’t much of a short built up whether you see in Nifty, there was hardly 1-1.5% build up and Bank Nifty corrected because of long unwinding.

What we are observing very closely is in this series of July, FIIs are at receiving end and they are not making money. They have been investing in cash market to the tune of Rs 8,000 crore at the same time they have shorted stock futures of Rs 4,000 crore. So even if you remove Rs 4,000 crore, they are net buyers in equity. I am removing Rs 4,000 crore because it is possible that these might be cash stock arbitrage.

They have bought almost Rs 11,000 crore of index options in July series and put/call ratio has come down from 1.24 to 0.99 today. We have seen huge pile up of positions, 5,200-5,300 and 5,400 call options. These guys have not shorted index futures and they have been long on that around Rs 1,000 crore.

These guys have been buying call options throughout July series of July series and markets have been coming down. They have not made money. So that has baffled us because we have been saying to buy at-the-money call option at 5,300, even at 5,200. So that has not panned out well.