F&O cues: July series to expire near 5120, says Future Cap

Jitendra Panda of Future Capital expects the July F&O series to expire around 5,120 levels. "At 5,200 lot of calls have been bought by FIIs and we are seeing premium among the August series. So, all together, put together 5,120 where I would say the expiry should come in," he explained in an interview to CNBC-TV18.

 Below is the edited transcript of Panda's interview with CNBC-TV18. Q: What is your view on  broader market stocks that we are seeing sharp falls in, case in point something like Tulip Telecom which is down around 25% or Pipavav Defence which is down around 20%, anything that you are hearing or possibly the reason why? A: Even I have heard a lot of reasons, but whatever we are aware of is that certainly margin call pressures are there. Especially after the F&O scripts, if you see an investor or a large trader basically these are traders who invest in lot of stocks and they had invested in the F&O stocks which went out of the fold. So, they had an impact there and we saw yesterday also heavy volumes there on those stocks, which created a margin call and a pressure because markets overall are down if you see on a mark to market basis for all the script which moved out of the F&O fold. So, there was some impact. Based on that those impacts it has flowed into the stocks which they were holding into, under the margins or as we say margin funding so there was some pressure. That’s what I heard and we are aware of in the market that these stocks are favorites among the margin funding clients. Q: What's happening at the index level itself, the Nifty has been calm around the 5100, what does it look like? Will it be able to maintain these levels towards end of contract? A: If you are looking at the end of the contract certainly, the market has been grinding within this 5,100 range and lot of put options added positions on 5100 for August and July series yesterday. We believe at the fag-end, just last half an hour can change anything, it can be 20 points up or down. If I have to place a bet, I would say that it would be more a 5,120 rather than 5,080 because it has been bouncing back from the lower levels although not significantly. We believe anything can change the game in the last half an hour because its very close, both the call and the put option whichever side it goes they lose or make. I am saying 5,120 based on the indications that 5200 lot of calls have been bought by FIIs and we are seeing premium among the August series. So, all together, put together 5120 where I would say the expiry should come in. _PAGEBREAK_ Q: Metal stocks have been weak for the second day running. We have SAIL which is down nearly 2% today as well we have Sesa Goa down around 1%. What are you spotting in the metal space? A: Overall there is weakness after the JSW and Jindal result. We saw a lot of profit taking and sort build up happening and there are concerns based on way the international commodity prices are also behaving. So, we believe that there is some fundamental pressure; the rollover has not been very enthusiastic on the long side. Overall we believe the weakness will continue. Till we see some pricing hike from the international markets we will see maybe more of grinding downward for the metal pack. Q: Anything specific you are expecting in the cement stocks because they were clear outperformers, have been doing very well. On that issue where do you think you might see extraordinary moves either long or short, either higher or lower in the last half hour? A: Ambuja Cement today is doing well but my bet would be more on ACC at the current price whatever is running. Keep a stop loss very strictly at Rs 1,265, for the August series also you can look at it. But then we believe ACC should do well. We have been seeing good consolidation and upward move from the lower levels. So, Rs 1310 could be the target in August series. Today also if you are looking for maybe ACC, Ambuja has already done its upmove and in the gainers today, top movers. ACC should be the bet where you should be placed for the last half an hour for the August series. Q: You have another pick today, Lupin which is down around 2%? A: I am giving this for the August series; we have seen lot of defensives doing well. Today if it is at a down level and if you are looking for August series you should look at Lupin. At the current market price you can take a long position for August with Rs 565 as the stop loss and looking at Rs 590 as the target. It is a little contrarian call from the downside, but we have seen long positions rolling over and maybe we should be able to get our targets very well.