Nifty may test 5550 in September series: Edelweiss Sec

Below is the edited transcript of Badkar’s interview with CNBC-TV18.

Q: Nifty is knocking on the doors of 5,450. What upside do you see for the Nifty for this series?

A: We are at 5,450 and 5,500 is the next level that we need to be looking out for. At this point of time the entire structure looks like it is very bullish, you do not want to short this market.

We are seeing is that the entire rally has been primarily by FMCG, pharma and IT and unfortunately it’s not the banking space. So, money is flowing only in these sectors.

We can always have some trading ideas like Tata Motors where you see 5% price move with 6% increase in open interest. So, you will come across these kinds of trading ideas wherever you see short covering.

By and large, it looks like the Nifty should be heading towards the 5,500 or 5,550. The downside currently seems to be capped around 5,250-5,300. So that’s like a broad trading range at least this expiry.

Q: You have got few trading strategies in pharmaceuticals; do you still think it’s prudent to be long there?

A: Within the pharmaceuticals space particularly Cipla and Lupin have continued to see money coming in. This trend will continue. We need to wait and watch whether the index breaks the year high of 5,630, but in the meantime in that trajectory Cipla and Lupin both look like another 4-5% upside in the next two weeks or so.

Q: Is TCS looking strong to you?

A: We have seen TCS outperforming for a very long time now. If you look at charts, the way open interest has moved and if you look at investor interest, money still seems to be moving towards quality.

Where we are right now on the index levels it just feels like more money will continue to move towards something that’s safer, more defensive. Within that space TCS can move up to Rs 1,440. So that’s a braver call to take, but I would still go with it.

Q: What is the target price you have on Tata Motors?

A: We moved closer towards Rs 275-280. Yesterday the kind of upmove we saw that wasn’t short covering, it was fresh longs. Throughout the settlement months from September 1 we have seen a lot of short covering happening but from here onwards it looks like its fresh long. It is moving back to the Rs 275-280 arena. So, another 6-7% upside is how I would think of it.

Q: Where would you be keeping your stop loss now for any long trades on the Nifty futures that your clients maybe carrying?

A: Once we open around 5,450 my sense is we move towards 5,500. At best you can keep stop loss around 5,380 or 5,350, so that is another 100 points lower. I do not think we will breach that level because if we look at the overall open interest on the options there is a lot of build-up at the 5,200-5,300 and even 5,400 puts yesterday.

As a matter of fact 5,400 puts was where the highest open interest built-up was. It looks like there is a lot of complacency or you may even call it confidence where 5,400 doesn’t seem to be breaching easily this settlement. However, the Fed announcement so that can change a lot of things. By and large 5,380 and 5,500 is where the Nifty should be trading this settlement.