June series: Watch out for action-packed next week

Vineet Bhatnagar, managing director, MF Global expects Bank Nifty to continue to outperform going ahead. "The underlying sentiment for the market or for the traders is the interest rate and therefore the interest rate sensitive sectors," he elaborated.

However, Bhatnagar is not look at adding new long positions to Bank Nifty now. "If traders already hold longs opened last week then there is no reason at this point in time to not let the profits run," he suggested.

Meanwhile, the following week would be news heavy week for the market. So, it is very critical for people to recognize that positions they are carrying should be ones that do not necessarily result in some kind of a double whammy, he added.

Citing a trading strategy for rest of the June series, he recommends buying Nifty call of 5,000 and sell one Nifty call of 5,100 and another one of 5,200.

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

Q: It’s not been a bad start to the June series, what do you see for the rest of it?

A: I guess it is a bit of a quicksand. We were quite inclined towards 5,000 expiration for Nifty in the May series and it happened immediately after that. So, in that respect the technical and the analysis that we did, did play out.

I agree with your assessment that next week is loaded with a lot of headlines that will come about both locally as well as from Europe. In that respect it is very critical for people to recognize that the positions that they are carrying should be ones that do not necessarily result in some kind of a double whammy.

There was a point in time where people were looking for 4,750 to break and it surprised everybody when it touched 5,000 and beyond. If people were to continue to add aggressively at current levels of 5,100 plus they may be in for another round of different kind of surprise.

Q: There has been hardly any activity especially on Nifty futures in this series so far. What is your reading of what the FIIs are doing in terms of a build-up or a strategy ahead of next week?

A: Just to look at the data there is an indication that the open interest that has been added in the June series by FIIs for Nifty futures is positive. They are adding on the long side, but in terms of the quantum the number is not significantly large or something that perhaps may underline a very high conviction long kind of position building.

Q: Do you see the possibility of a lot of short covering post the events of next week from the global guys from what rolled over into the June series from May?

A: It is indeed possible.

Q: Tell us about the prospect of short covering in the next few days?

A: There is indeed a possibility that if things were to turnout differently there will be good amount of short covering that will come about. There are still two trading left in this week. If technically speaking levels such as 5,190 were to be taken off and there is a steady march that we see today and the next two days then it is possible that the short covering may come in earlier than the other days that we have noted down in our calendar, which is 18th and 20th.

Q: Aside from global events the market seems super primed about the RBI as an event in terms of what it will do for the market. What kind of action or build-up are you seeing on the bank Nifty? How would you trade that?

A: The Bank Nifty is one that has mirrored the movement in the Nifty or market as a whole pretty much from January this year. Therefore all the ups and downs that we have seen in this calendar year are reflected in Bank Nifty easily. When it bounced back yesterday, we saw an across the board rise in tide as far as the banks are concerned.