Nifty may test 5460-5470 by end of today's session: IIFL

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Nifty may test 5460-5470 by end of today's session: IIFL

Ashish Chaturmuhta of IIFL Private Wealth Management expects Nifty to see downside pressure because it has not been able to fill the gap created today. He sees Nifty testing 5,460-5,470 levels by end of today's session.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets Reliance BSE | NSE 01/06/12 Are Mutual Funds betting on Reliance? Other Stocks in this news State Bank of India | Punjab National Bank | Corporation Bank | Axis Bank | Petronet LNG Ltd | ITC | Bharti Airtel | Idea Cellular | Reliance Communications | Hero Motocorp | Maruti Suzuki India | Tata Motors | Mahindra and Mahindra |

Ashish Chaturmuhta of IIFL Private Wealth Management expects Nifty to see downside pressure because it has not been able to fill the gap created today. He sees Nifty testing 5,460-5,470 levels by end of today's session.

He expects, State Bank or Axis Bank to create more selling pressure on banking index as a whole. "The Bank Nifty may move towards 10,840 or 10,820 levels by today's session," he added.

Below is the verbatim transcript of his interview with Latha Venkatesh and Gautum Broker of CNBC-TV18. Also watch the accompanying video.

Q: A word first on the Nifty, how you are seeing the rollovers panning out and what's the kind of range you are expecting for the next series and also a word on Reliance Industries , is the selling happening because of the Volume Weightage Average Price (VWAP) pressures right now?

A: The rollovers on the Nifty index are quite in line with the average rollovers of the last three months. But if you look at the cost of rollover it is comparatively lower than the last three months. So, shorts are getting more dominated over the longs at this point of time on rollovers.

This gives a sense that it would be quite difficult for the market to sustain at 5,500 mark today. Nifty could test downside levels of 5,440-5,450 in panic by today itself. If you look at the broader range of the market then last month we closed around 5,560 levels and this time it's around 5,500 levels. So definitely there is a lot of selling pressure at the higher end.

Also Read: Nifty to find comfort at 5500 levels says MF Global

Q: But we have seen some bit of a recovery from today's lows. We saw the market go upto 5,470 and then kind of steady itself over there. What is the sense you are getting, we will be able to end the contract around 5,500 or is this just flattening and you one knock is waiting to happen?

A: Yes, it's more of flattening and now there can be some downside pressure because market has not been able to fill the gap, which it has created today. There can be a possibility of 5,460-5,470 levels being tested today by end of the session.

Q: Stockwise then where do you think the pressure will come? Will it come on banks? Will it come on the infra stocks? Where is it looking wobbly? Where perhaps long unwinding will happen?

A: Reliance is continuously trading on a month on month lower levels. This gives a sense that if Reliance breaks Rs 830-Rs 820 levels then definitely it may touch Rs 790-Rs 770 levels on the downside. If you look at public sector banks, State Bank or PNB are continuously making a lower top. Shorts are being added on these counters.

Cost of rollovers are continuously coming down. This means that longs are being forced to cut their positions at this point of time and there could be a lot of selling pressure. But if you ask about strength then definitely telecom is one sector where we are seeing lot of long positive rollovers. An upside of 5-8% could be seen there.

Q: If you pull up the Bankex after noon we have actually seen the bankex pull itself up. It's still in the red, about 1%, but in the morning trades it was actually down about 1.8% at one point in time. We are seeing a slow improvement, not seriously. But there is a slow improvement and that is largely contributed by PNB and several other stocks, Corporation Bank , all of them improving. You think that this may not hold? That banks stocks could comeback in the last hour of trading and take a knock?

A: Yes, this is because the weightage of stocks like State Bank or Axis Bank particularly will create more selling pressure on banking as a whole. The Bank Nifty may move towards 10,840 or 10,820 levels by today's session as well.

Q: A couple of stocks, Petronet LNG this time had done really well in the series. There is some pending rollover over there. What kind of a movement are you expecting in the next series and also a couple of stocks like ITC and the FMGC of the defensive space, anything that you recommend going long on for the next series?

A: As far as Petronet is concerned, any dip from the level of Rs 170 should be used to go long in the counter. This is because the build up seen in this counter in this series that gives a sense that lot of long accumulation has been seen. On the upside this stock can target Rs 190-Rs 195 levels in days to come.

Apart from that, we have seen a significant build up of a long positions in Bharti , Idea , Reliance Comm . These can do well even in the next series. As of now things are more stock specific than sector specific. In the auto sector, Hero Honda and Maruti have seen very strong rollover with a positive bias.

We can see more upside in these counters. Selling pressure can be seen in Tata Motors and M&M , so a pair trade can be initiated with long Hero Honda or Maruti and short Tata Motors and M&M.