Chances of Nifty breaking 5400 level bleak: HDFC Securities

However, FIIs are now active on Indian stocks; there is a case of people willing to buy on dips. But the chances of breaking 5400 level on the higher side, immediately appears slightly bleak.

Below is the edited transcript of his interview to CNBC-TV18.

Q: Will the Nifty be able to climb over 5350-5400 bump or are you sensing any signs of fatigue?

A: It’s going to be a slight tall order. The market movement of last few days shows that the momentum which was built in when Chidambaram took charge of the finance ministry appears to be loosing steam.

However, FIIs are now active on Indian stocks; there is a case of people willing to buy on dips. I think it will be difficult to break 5280 level even under the current situation today.

But the chances of breaking 5400 level on the higher side, immediately appears slightly bleak. We need to wait for the number of holidays coming up. We can expect the Nifty to cross 5400 only after August 20.

Q: What is your view on sugar because this sector has come back into the limelight in the last one month?

A: Sugar stocks are moving in a higher range. Despite poor results stock like Balrampur Chini has moved up in last two days. Fundamentally, Balrampur Chini is the best stock, it is also in a belt where it is unaffected by poor rains as it has recourse to irrigation, so it can have a large amount of crop in the current year.

The call is liquid in this stock so buying the 67.5 call which was available at Rs 1.8. This stock can be bought and hold for either for the whole series till the expiry or one can keep in a stop loss of 50 paisa.

Q: What is your call on BGR Energy ?

A: The energy sector was largely hit by the IIP numbers but the stock is weak. The stock continues to see short selling despite the stock going down. Shorts were happening even at that level. One can sell BGR futures at Rs 276 with a stop loss of Rs 279 and hope to cover the shorts sells at Rs 268 levels.

Q: How would you approach Cairn India ?

A: Cairn India stock was down yesterday after the resignation of Dhir. Till the time UK Cairn is linked with the company there are no chances of pranks being played by Agarwal. For the long-term investors and traders this stock continuous to be a good bet.

So, buying 320 call at current price and selling at 340 call, which will reduce the cost by approximately Rs 6 and there is a possibility of gaining Rs 14. In all it is capped at Rs 20. The risk reward ratio is pretty good. Doing this it will favour the current series.

Q: How is your approach towards Hindalco today?

A: Hindalco was slightly better as shorts didn't happen. Although the stock was stable we saw some shorts being pruned on the counter. So, options are pretty liquid. I suggest buying the 130 call which is slightly away from the current price of Rs 122 but since it's available at Rs 1.5. One can hold on for the current series and make Rs 3.5, which is more than the premium that you pay.

Q: What is your call on OnMobile Global ?

A: The case of OnMobile is interesting, although it is one of the 51stocks which is retiring after September series. Though the results came out last week, an investor call is slated for August 14 where investors who hold the stocks in large numbers can sell the stock in the rise to the August 14 development.

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