Nifty may break 5330; cover your shorts: HDFC Securities

According to him, this is a market which needs to be bought and short needs to be covered.

Also read: Traders must take a long position today, says Sudarshan Sukhani

Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.

Q: Do you think the Nifty will be able to pierce past the first port of resistance?

A: I think 5,330 is going to be a tough call. That is where all the technical analysts would have their eyes on. But it is in the realm of possibilities. There is an upwards chance of that breaking.

There are a couple of things going for the market. We have central banks of the world walking their talk. We also have the parliament session coming to an end. There is an opportunity for the government to show that it can really work out, if it can touch diesel, no matter how slender that rise may be. But if it does show the capability, political ability to touch diesel, I think the market would give all the marks to Chidambaram. This is a market which needs to be bought and short needs to be covered.

Q: What kind of strength are you seeing on the IT charts? Within that, what strategy would you have on any individual names?

A: Logically, one should take a position in the IT index itself. But for a change, it has not taken off. There is only Rs 9 crore of open interest as compared to Rs 2,100 crore of open interest in the top four IT stocks, unlike Bank Nifty. Bank Nifty’s open interest (OI) is almost Rs 4,300 crore, top four banks almost totaling Rs 4,900 crore. So, you will have to pick and choose.

Although IT sector per se is doing well, if you want to choose large caps then perhaps you have to look at Infosys. In Infosys , I am suggesting bank the 2,450 Call at Rs 43 where it closed yesterday. Since the market will open higher, you will have to buy whatever the rate is and hold on till the end of this series. If you want to really looking at a smallcap, then you need to look at Hexaware where a lot of open interest has been built. I will suggest buying Rs 130 Call there.

Q: You have a strategy on State Bank of India (SBI), can you tell us about that?

A: SBI started going up even before the overall market had done well. That was largely on account of the cut in the deposit rates. But this stock has seen quite an amount of shorting happening. So, if at all the market has to revive, it has to ride back on SBI. So, in SBI, I am suggesting bank the 1,850 Call at around Rs 57 where it quoted yesterday.

In case people find it expensive then because the market will open higher, then maybe buying the 1,900 Call, which was available around Rs 25, could be a good strategy. If you are buying the 1,850 Call, keep the stop loss at Rs 40 and hope to double your premium in the current series.