Nifty won't cross 5450 unless Germany okays ESM: HDFC Sec

VK Sharma of HDFC Securities told CNBC-TV18 that with Nifty inching closer to 5,400 mark, people would add further positions. Resistance for Nifty is seen around 5,450 levels .

However, Nifty won’t be able to breach that level on the upside unless the German Constitutional Court rules in favour of the European Stability Mechanism (ESM). He suggests buying 5,400 calls or 5,500 calls and hope that decision is pro-euro.

Below is edited transcript of Sharma's interview to CNBC-TV18.

Q: How should one approach the Nifty this morning?

A: The market is already knocking at 5,400, it closed at 5,390 yesterday so my sense is people would like to build their positions further. It will run into a good amount of resistance around 5,450 and it will be very difficult to cross unless we hear from the German court.

The options are very liquid so rather than taking risk in terms of buying the stock futures or index futures, my sense is people should buy 5,400 calls or 5,500 calls and hope that the decision goes right in Europe.

Q: You would be long on which bank today?

A: Both public sector undertaking (PSU) and the private sector banks have done well. Among the PSUs Bank of Baroda did well and open interest was added on the positive side. Although positions are still being pruned in the Bank Nifty, my sense is it could do better than the bank Nifty.

I am suggesting buying 660 Call which was available at around 9. Hold on till the end of the settlement and keep a stop loss at Rs 4. In case of ICICI Bank, it closed at 946 and 960 call is also available at around Rs 15, so one can keep a stop loss at around Rs 8 and hope to double gains. One can sell at Rs 30 or hold till the end of the settlement. Buying here would be better as compared to buying the Nifty per se.

Q: Do you have any trading idea in midcap IT pocket?

A: Both Hexaware and Rolta have done well yesterday. We had earlier suggested Hexaware since had broken out above Rs 130. These still have a long way to go. Between the two, Hexaware is slightly better placed in terms that the rise yesterday wasn’t as high.