SENSEX NIFTY
May 22, 2013, 10.24 AM IST | Source: CNBC-TV18

Nifty to consolidate; go long above 6200: ICICI Direct

Amit Gupta of ICICI Direct feels that 6,200 Call option will remain a critical resistance for Nifty. One should wait for some profit bookings to reenter from lower levels.

Amit Gupta

Head- Derivatives, ICICIdirect.com

Expertise : F&O

More about the Expert...

In an interview to CNBC-TV18, Amit Gupta of ICICI Direct spoke about the current trend in F&O market.

Also read: Market to be choppy; buy on dips, sell on rallies says Sukhani

Below is a verbatim transcript of the interview:

Q: What is your sense of what the Nifty will do next after the pullback of the last couple of days?

A: If you look at the Nifty futures and Bank Nifty futures open interest (OI) data, it has come to the same level where it was in September last year. Before September last year we had seen a surge of more than 10 percent from 5,200 to 5,800 something and this time also we have seen a surge of more than 10 percent. Coming closer to those OI levels we should look at what happened in September. We saw a consolidation for almost a month, market was just moving in a 200-250 points range. So we are into that kind of consolidation right now.

After May 3, 10 lakh shares of volumes happened in intraday yesterday around 6,200 levels. Traders also are not closing the positions yet and we are approaching towards expiry. So 6,200 Call option will remain a critical resistance on the higher side. After a move above 6,200, I will reopen my long positions otherwise I will wait for some profit booking to come and then will reenter from the lower levels.

The volume weighted average price (VWAP) of the series is placed around 6,030. The highest Put base is somewhere around 6,000 and that was mainly written at a price of Rs 50 or 70. So 5,950-5,930 levels again will act as a good support on the lower side. We are into a consolidation. One should wait for some declines and then can go long in the market or if Nifty takes out 6,200 then we are going to see very sharp 100-150 points of move at least.

Q: How are people positioned on the Bank Nifty at this point?

A: On Bank Nifty, 13,000 Call strike is the highest open interest (OI) base and it is trading above that level. You can understand what kind of pain the Call writers have at this particular strike.

Around Rs 250-200 of premium, we saw that this particular strike was written in the beginning of the series when the positions were rolled over from the previous series to this series. In this month when you are slowly approaching towards expiry, we may see the rollover of these positions from May to June. So 12,750-12,800 is going to be a good support for Bank Nifty.

If you look at the private banking heavyweights, one-two stocks have gone to a lifetime high. For HDFC Bank , Rs 670-675 is a good support area. You can go long from there.

If State Bank of India (SBI) comes to Rs 2,280 level, I will re-enter into long positions.

Rs 1,500 is a critical area for Axis Bank . If it comes to Rs 1,460, I will reenter into this stock.

I am waiting for this particular profit booking to come and then to reenter into this banking segment.

Q: What is your strategy on Infosys today? How are you playing that?

A: The currency has depreciated recently. Along with this you look at Rs 2,300 base for Infosys. When it was falling, we saw somebody was writing Rs 2,300 Put option and afterwards it did not come down. It was slowly inching up. Now in the last one-two weeks, we are observing that there is a continuous closure of OI in Infosys but if you compare with the other technology heavyweights, they are seeing the additions. Because the stock can come down drastically, the short traders are slowly exiting the stock and this possibly is going to provide Rs 100 upside in the stock. If you are seeing Rs 2,380-2,390, you can enter into long positions, look for a target of Rs 2,470 or slightly higher in the stock and keep your stop loss around Rs 2,330.

Q: What would be your top picks in the public sector undertaking (PSU) banking space, you have got a strategy on Bank of India (BoI) but that aside what would be your picks?

A: If you look at SBI, there is a continuous closure of OI. The stock is not heavy in terms of OI. So I do not see much of the downside in the stock. Around Rs 2,280, any particular profit booking should be held.

The midcap PSUs have not participated to that extent barring Punjab National Bank (PNB) or Bank of Baroda (BoB) kind of stocks.

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