Buy on dips with tight stop loss at 4950: Hemant Thukral

Hemant Thukral of Aditya Birla Money does not expect much volatility today like in the last two series. In his view, Nifty may remain in a range of 5120-5180. Thukral said in an interview to CNBC-TV18, "Going forward, you should continue to recommend buying on dips with a tight stop loss in Nifty at 4,950 because that would be the danger point as per as the bulls are concerned with a target towards 5,280."

Below is the edited transcript of his interview with CNBC-TV18. Also watch the accompanying video. Q: How do you expect the series to close at and what kind of range are traders talking about for July?
A: I do not expect much volatility like the last two series now put together because a majority of the rollovers have already done. Usually, volatility creeps in the last one hour due to a lot of pending stock futures rollovers but because the stock futures rollovers are above average. I do not see any major volatility coming through in today’s trade. So Nifty may remain in a range with 5,120 on the downside. On the higher side, we may not be able to cross 5,175-5,180 mark today.
Going forward, in the July series, if we see how the option writers are arranging their positions - 5,000 put has built-up a very strong base. It has the highest open interest across all option. This means put writers are seeing a base at 5,000, not much lower than that.
So till Nifty holds 4,950 - if you adjust the premium of 5,000 put, Nifty can be bought at dips with an immediate target towards 5,280-5,300 mark. The highest call open interest accumulated in the next series is around 5,300 mark. So 5,280-5,300 will be a real tough resistance. Going forward, you should continue to recommend buying on dips with a tight stop loss in Nifty at 4,950 because that would be the danger point as per as the bulls are concerned with a target towards 5,280. Q: Do you have a buy on Power Finance Corporation (PFC) today?
A: Yes, two major reasons. One, in the immediate short-term, this stock is looking strong. More importantly, the way the rollovers have progressed in both PFC and Rural Electrification Corporation (REC) saw very good rollovers yesterday. But PFC’s cost is much better than REC.
I recommend that one should accumulate today at Rs 173-172 mark; the number it closed at yesterday. Keep a tight stop loss of Rs 169. The first target that we see in immediate short-term is Rs 179-180. Once it manages to cross that then it can even surprise by going up to Rs 190. But in the immediate short-term, the first target would be Rs 179-180 for this stock. Q: What signs are you seeing for Bank Nifty in the early part of the July series?
A: If Nifty has to move, as we are expecting towards 5,280-5,300, the main contribution has to come from the banks. There is some differentiation that we can do within banking stocks on how the rollovers are progressing.
For me, Bank Nifty still looks strong till it holds above 9,550 mark. Bank Nifty is the main contributor going forward in July series also. If you see the rollovers the midcap PSU banks have continued to show good rollovers especially like Bank of Baroda which has seen a huge jump in rollovers; this time already around 49% which is well above six months average 36%. The cost is very positive. So it suggests that the immediate short-term the stock can go up to Rs 747.
On similar patterns, you can even seen good rollovers in Axis Bank and HDFC Bank. The only disappointment which I can see is in SBI which gives me signals that people are not much confident on the counter. I still feel Bank Nifty will continue to contribute to the main rally but maybe the private banks and midcap PSU banks are better located as per the rollovers. Q: Which stocks standout from the heavyweights going into July series?
A: If you check on the Nifty 50, I have three-four stocks marked which can be complete outperformers. One will be Reliance. I think it's the first series where Reliance has outperformed Nifty after eight series.
Second, the rollovers are on a higher scale than what we are seeing from last six months average with a higher cost, which gives a very positive signal for Reliance. So I would buy Reliance with a stop loss of Rs 680 on it.
Secondly, the counter would be both the heavyweights on the IT side. I like the rollovers both in Infosys as well as TCS suggest strength. Infosys has been in a complete consolidation range but before the results, we know that next month is results, the rollovers are suggesting that there is some strength which is coming back in both the heavyweights. So I would watch these three counters along with the banking heavyweights.