Nifty to hover between 5780-6000 till expiry: ICICI Sec

In an interview to CNBC-TV18, TS Harihar of ICICI Securities shared his views on the F&O market and various stocks.

Below is a verbatim transcript of the interview:

Q: After the volatility of the last couple of days, what could be a good strategy on the Nifty now?

A: I would like to share a couple of observations first. It is the first time when in a short span of 15 days, three times the implied volatility (IV) has moved from 13 to 17 and back to 13. Going ahead, we believe that the Nifty should be range bound between 5,780 and 6,000 over the next eight days of expiry.

Strategically, we are asking our clients to do a reverse straddle, which would effectively mean you sell 6,000 Call and also sell 5,800 Put. That gives you a premium of about Rs 70. So, in a range of 5,730 on the downside and 6,070 on the upside, you are profitable.

We believe it is extremely unlikely that the market could get out of this range during this expiry.

Q: How would you trade the banks and the Bank Nifty after the intraday turnaround yesterday?

A: We have been observing the banks especially the public sector undertaking (PSU) banks quite closely. What we get to understand is that a lot of those frontline PSU banks seem to be very close to the long-term bottom.

So, yes we would still wait for a confirmation that the market has taken support. Last few days the market has been too volatile and it is very difficult for us to take a call on the bottom when the market is so volatile. Once there is clarity on the bottom, we would definitely go in and buy the frontline PSU banks.

Q: Anything from the IT pack that stands out in terms of a position build up?

A: In fact most of the frontline IT stocks -- at least two of them Tata Consultancy Services (TCS) and Infosys do seem to be seeing a mixture of long unwinding and shorts build up. So, these two stocks at least look like there could be some temporary resistance at these levels. However, as far as HCL technologies and Wipro go, we are still seeing fresh longs getting built up at every dip.