Nifty may surprise on the way up: HDFC Securities

According to him, if the Nifty recoups the level of 5,380, it will be a case to go long right away. "If you want to play safe then maybe buying the 5,400 Call, which is available at Rs 45, is a good strategy. If you want to reduce that cost, maybe you could ride the 5,300 Put," he asserts.

Also read: Nifty may test 6k in 6-9 months; focus on stocks, says StanChart

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

Q: What is your strategy on the Nifty? How would you play the Nifty at this juncture? Do you take this resistance at 5,370 very seriously and perhaps peddle for some short-term sells or do you think it is best to stay long in this market?

A: I think it is a compelling story to look for stocks that are doing well. Therefore, one has to have a positive view on the market. My belief is that the Nifty could surprise all of us on the way up.

In our interaction earlier, I had said that crossing the level of 5,400 will be a job that will be best left to the market after August 20 because we have a holiday coming up. But in case we are able to even recoup the level of 5,380, I think it will be a case to go long on the Nifty right away.

If you want to play safe then maybe buying the 5,400 Call, which is available at Rs 45, is a good strategy. If you want to reduce that cost, maybe you could ride the 5,300 Put. But that opens to further risk down. If you want to play safe then buy that call.

Q: In the list of stocks, where you have strategies, there are two interesting ones from the finance space, which has seen a decent amount of rally, IDFC and Axis Bank . Can you take us them?

A: IDFC has done pretty well for itself, not only the open interest went down because of profit taking, but the stock went up. So, when stocks get sold, positions get unwind, still the stock goes up, I think there is some semblance of an order here that the stock is going to move up. If the private sector is going to play larger role in the roll out, IDFC is the stock to watch in case you want to invest.

From a traders’ perspective, I will be comfortable in terms of buying the 140 Call, if it falls from the levels of yesterday and buy at around Rs 3. Keep a stop loss at Rs 2 and hope to sell it at a decent profit in the current series.

The other one that I like is Axis Bank. Axis Bank has done well. While other private sector banks the larger ones were not doing well, this is one stock which is beginning to do well. So, in Axis Bank, my strategy is to buy the 1,120 Call, which is available at around Rs 21, keep a stop loss at around Rs 10 here. I hope to sell this at Rs 45. But the safer sector to invest would still be the power sector.

Q: What about Ambuja Cement ?

A: Ambuja Cement has got into a profit taking mode. Although the positions were not built on the shorter side, but the stock did go down. I think it makes sense to people, who are holding the stock, to do a bear spread. Buy the 190 Put and sell the 180 Put simultaneously, your cost comes down to around Rs 2 and you could hope to protect somewhere around Rs 8. If you do not even hold then perhaps taking a bearish call and a contrarian call on the market could help the people who want to go short.