Nifty may see 5400, buy on declines: ICICI Direct

According to him, the Nifty may see support at 5,280-5,340. "If you look at the market, I think it has largely been driven by the largecaps and not by the midcaps," he adds.

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

Q: What would be the support and resistance level for the index?

A: I think the major support on declines is going to be a 5,280 for the positional traders and around 5,340 for the intraday traders. Now, if you look at the market, I think it has largely been driven by the largecaps and not by the midcaps. Now, particularly if you look at non banking heavyweights like Reliance , Infosys and L&T , we have seen good performance from them. We are mostly trading in a range.

Now, after the inflation numbers, the banking stocks have also started participating, particularly the private banking. Till this expiry, the market is going to be trading with a lot of positive bias. On declines, we can continue the stock specific momentum.

If you look at the options base, I think 5,300 Put has almost 85 lakh shares and is almost neck to neck with the 5,000 Put where the premium has already vanished. At 5,300 Put, if you compare the premium with the previous series’ premium, we are seeing that this time the premium is very much subdued. It means more put writing is happening in this series at the lower levels.

If you look at the higher levels, the call options are not picking up that much. We should not buy the market now rather we should just wait for some declines. Once it comes, we should start going with stock specific moves.

Q: You have a buy on Axis Bank .

A: Yes. If you look at private banking, we started participating from Friday onwards. On declines, I feel Rs 1,060 should be the stoploss. At around Rs 1,090-1,095, you can initiate long positions and look for a target of around Rs 1,150.

Q: Would you have a conviction long position that you would hold on the index now or do you think some protection is prudent at this juncture?

A: If you look at 5,400, it has been a breakdown level in the month of August 2011. Again we have approached this level. So, there will be lot of jitters actually around 5,400. But the best part of this particular rally is that the overall broad market has not participated yet and we have come up to these levels. So, my sense is we are going to spend some time.

It is very much possible that 5,400 may also be taken out. But breaking out a level and buying immediately above that, I will not advise because the nature of this market has been it declines, forms a base and then it starts moving up. If it is coming down towards 5,340 or eventually to 5,280, that should be picking up times for the market and then look for the targets of beyond 5,400, which could be 5,460.