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Nifty to break below 5000 to end range-bound trend: Dalton
In an exclusive interview with CNBC-TV18, UR Bhat, Managing Director of Dalton Capital Advisors, spoke about his reading of the market and the road ahead.
Q: Where do you think NMDC will settle eventually from a secondary market perspective given the kind of allotments that you have seen in the follow on public offering (FPO)?
A: I think it should settle around the issue price because there may not be too much of appetite for new buyers to come at price much above the issue price as it is trading now because almost unlimited quantity was available at Rs 300 per share and people have not bought it, which means that it will be unlikely to me people buying at Rs 350 per share or whatever. Therefore, it should settle down at about Rs 300 or thereabouts and if it comes below that probably at least the retail allottee will panic a bit and sell out. The large institutions would hold on for some more time till another divestment is announced and probably if they have to raise some money to subscribe to that so till then it will probably hover around the issue price, I presume.
Q: How would you tactically position yourself in a market which is range-bound and difficult to call on which side it will break? What would you be riding at this point?
A: I think the way to handle this is keep some cash because if there is a correction you need to buy into that and probably by a bit of options and hedge yourself. I think that's the way you should do. Where you have high conviction, you should have invested that and you should be holding on to that. But the rest which are on the fences as they were you should convert them into cash, hold it and play through the options.
