Mkt volatility to continue in April series: Amit Trivedi

After a volatile March series, which was a result of weak global cues and political turmoil, the April series too may see similar choppiness, said Amit Trivedi, Co-Founder, Investworks.in. In an interview to CNBC-TV18, Trivedi, however, expects some relief rally in the market.

Also Read: Nifty deeply oversold; don't short sell: Sukhani

Talking specifically on Tata Motors, Trivedi says one can sell Rs 320 strike calls at around Rs 1.50 to make a profit of Rs 1,500 if the stock remains below Rs 320.

Below is the verbatim transcript of Amit Trivedi's interview on CNBC-TV18

Q: What can the Nifty do in the first half of the April series? How would you like to be positioned?

A: In March we experienced a good amount of volatility in the markets especially in the second half of the month. Volatility should continue in the April series as well. You also have some more uncertainties in the markets predominantly from Europe and political issue. Due to the increases that we are seeing in from April 1, you may have some spike in inflation. So that may deter Reserve Bank of India (RBI) from the policy decisions by a couple of months.

Broadly, market should be volatile and choppy. Although there could be some relief rallies as you are seeing. We recommend going for ratio trades on Nifty. For example, 5800 calls can be bought at Rs 50. Sell two 5900 calls at Rs 23. Rs 4 invested, if the market remains here or gradually moves up or goes down, this spread of Rs 4 will increase to around Rs 14 and at that price one can unwind. So, those kinds of trades can be done for this particular series.

Q: Do you have a trading call on Tata Motors today?

A: Tata Motors has been consolidating between Rs 260-280 levels. Due to the global sell off or the sell off in autos in general, this stock also corrected below Rs 280 levels, so upside for the stock remains capped for the moment. One can sell Rs 320 strike calls at around Rs 1.50. You make a profit of Rs 1,500 if Tata Motors remains below Rs 320 which is approximately 13-14 percent from current levels of Rs 270. You may have a stop loss if Tata Motors moves beyond Rs 310 levels and may unwind this particular strategy.

Q: You have a trading strategy on DLF as well, how are you playing that?

A: After hitting a 52 week high of around Rs 289-290, the stock has corrected to Rs 230 which is 20 percent from the top. Trading near the price options or at the money options could be quite tricky at this moment. There is some expectation of price moving up because of the stake sale meeting expected this month. So if the stock goes up slightly, one can sell Rs 300 strike calls of DLF at around Rs 1.5-2. You will make losses if DLF crosses Rs 300 which is quite unlikely. You may like to place a stop loss at around Rs 290 levels which is approximately 20 percent from current levels of Rs 230.