In an interview to CNBC-TV18, Hemant Thukral of Aditya Birla Money, spoke about his reading of the market and his outlook on various stocks.
February 28 will be the big day for futures and options (F&O) market as the much talked about Union Budget 2013 will be announced and the February F&O series also expires on the same day.
According to Hemant Thukral of Aditya Birla Money people are waiting on the sidelines for this event to play out. Once the Budget is announced volatility may creep into the market because majority of the volumes will happen that day.
For current series, the broking firm is waiting for the market to rebound to 5,930-5,950 for taking short positions at higher levels. " We will not going to short at current levels . For next two-three days, we are totally on sideways."
Below is a verbatim transcript of the interview:
Q: Big week for you, there is Budget and there is expiry. How do you expect it to go for the Futures and Options (F&O) side?
A: Yes, this week will be very important and big for us especially seeing what has happened on Friday. Stock futures rollovers is 50 percent, positions have been rolled of a six months average of trading days minus 4 (T-4) that means stock futures rollovers are only 12 percent.
So, it is clear that people are waiting on the sidelines, waiting for the event to happen and then roll now. If that happens then obviously Thursday becomes a very crucial and a volatile day because majority of the volumes will happen on Thursday.
Having said that, there is a very interesting data point that in March highest Put additions is in 5,800 Put. It means that 5,800 becomes a very important base not for this month itself but for the month coming forward.
So if 5,800 is given away or if we break 5,800 on a closing basis, the selling pressure may intensify and then we may have to see levels of 5,650 also. So 5,800 is the most crucial level on which every Put writer is betting their money this month as well as next month.
For current series, we are on the sidelines currently. We will be waiting if market rebounces back to 5,930-5,950 to take any short positions at higher levels. We will not be going short at current levels . For next two-three days, we are totally on sideways waiting for a rebound till 5,930-5,950.
Q: What is your sense of the kind of activity that you are seeing from the Foreign Institutional Investors (FIIs) right now? What is that indicating before the Budget?
A: FIIs on the derivative front have been the biggest disappointment in the last 15-20 trading sessions because they have been on the selling side on the index futures and buying side on the index options. Clearly they have played on the rising side of volatility and that has put pressure on the market.
On Friday also, the selling continues in index futures though the VIX (volatility index) has reached six months high. What I have been seeing in last three-four sessions that they have stopped buying index options. This is an area where they feel that maybe VIX will cool off a little bit or maybe stabilise a bit.
That again puts my point forward that maybe 5,800 will hold as a support and we may rebound back but very clearly, they have not started buying index futures till now that is a disappointing signal. The first pullback will be materialized once they start buying index futures, which is still missing.
Q: The Bank Nifty lost the most ground last week, down almost 2 percent, how are you trading the Bank Nifty in this week?
A: Bank Nifty has technically given a breakdown below that 12,200 mark, which was holding as a very strong support. But immediate support like Nifty 5,800, Bank Nifty is also around 11,850-11,800. So till the time Bank Nifty is able to defend that, you may see a pullback coming to 12,500-12,600. However, I am not expecting a very big rally on the banking stocks or on Bank Nifty unless until it crosses 12,650.
So, every rally we will see fresh shorts being built up in place. Again at current levels, I would like to wait and see whether it breaks 11,800 and not. I am expecting a rebound back to 12,450-12,500. That would be a good zone to go short. So like Nifty, I expect Bank Nifty also to take support and see some rebound in coming one-two trading sessions.
Q: You have also got Lupin on your trading list today?
A: That stock has seen some fresh open interest being built up on Friday. It has already started showing signs of some good rollovers in the next series, which is an encouraging signal.
Technically also this stock has managed to close above Rs 600. It was consolidating between that Rs 585 to Rs 600 zone. On Friday, it has managed to do that. If it sustains above that in immediate short-term, we feel that the stock can go ahead and retest Rs 625-630, which has been a major resistance zone for the stock.
Traders can go long keeping a stop loss at the lower end of the consolidation range i.e. Rs 585-586 for a target of Rs 625-630 in immediate short-term.
Q: If we do see an upmove over the next couple of days, how would you approach the Nifty then, would you be looking at shorting opportunities or to go long?
A: If it manages to go back to 5,930-5,950 which I am looking as a rebound target for me then I am definitely going to give it a shot to short it rather than going long. The reason is that again if 5,800 Put writers are aggressive then 6,000 Call writers are very aggressive. Very clearly, it has broken below 5,850 and it has given a weekly closing right at 5,850. So, things are not so much positive but definitely you have to select levels to go short. At higher level of around 5,930-5,950, I will be going short and again expecting it to retest 5,800 levels.
READ MORE ON Hemant Thukral, Aditya Birla Money, Budget, F&O, FIIs, Lupin, Bank Nifty, volatility index, VIX
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