See Nifty around 5800-5850 before Budget: Fin Stream

In the absence of key triggers, the Indian equity benchmarks have been slightly wayward in the last few trading sessions. Amit Trivedi, Director, Fin Stream Financial Advisors believes though, the market is moving down over the past few days it is not something significant. Therefore, just before the Budget, Nifty might hover around 5,800-5,850 levels.

Also read: Momentum favouring bulls, stay long on Nifty: Sukhani

At the moment, he also remains positive on State Bank of India.

Here is the edited transcript of the interview on CNBC-TV18.

Q: What signals are you getting on the Index? Do you think a significant break below 5,900 is coming?

A: Yes. If you look at the markets, the way they have been behaving over the last few days it seems they have been moving down, but not significantly. Everyday around half a percent or so is the move that we are experiencing. I think just before the event it should consolidate somewhere around 5,800-5,850 levels.

Typically, the way we are looking at the Options data is you have a 6,000 straddle at around Rs 130-Rs 140. That is indicating that market participants are getting slightly complacent and don't expect much bigger moves and we don't need to see how it comes. I think it should be around 5,800-5,850 levels just before the budget.

Q: Do you have a strategy on Tata Steel this morning?

A: Yes. Tata Steel is expected to come out with numbers and it is not expected to be a great set of numbers. We think traders and investors can go and sell 440 strike calls of Tata Steel. Because of the result expectation implied volumes have increased at around 34 percent for these options.

So, one makes around Re 1 at this point of time by setting these calls. Just after results also volumes will come down and this call option should come down to around 0.5 rupees or so, at which price one can unwind or can continue till expiry also.

Q: The one stock that has been suffering a lot from infrastructure is JP Associates, you have a strategy on that one?

A: Just after results the stock corrected and it has bounced back from around Rs 68-Rs 69 levels to around Rs 72 levels. We think option writers are becoming slightly more complacent on markets and as we approach budget day. Options volumes should pick up. You have a straddle of JP Associates 72 strike at around Rs 6.5.

We think whenever during this week or early next week it comes to around Rs 5 one should buy the straddle which is buying both call and put. Your investment is Rs 5 in this particular trade and one will make money if JP Associates either rallies beyond Rs 75 or falls below Rs 65. One can place a stop loss of Rs 2 in this particular trade.

Q: You also have a strategy on State Bank of India? That is probably going to be in focus this morning?

A: State Bank of India (SBI) should be in focus and the stock has corrected from around Rs 2,500 levels just before the Reserve Bank of India policy to around Rs 2,300 levels right now. We think that if there is anything, there could be a small pull back in this stock and because of results tomorrow, options vols are quite interesting.

One has a 2400 call at around Rs 34 and 2500 call at around Rs 15. One can buy 2400 call at Rs 34 and sell two 2500 calls at Rs 15. There is an investment of Rs 4 in this trade and you make profit if SBI rallies beyond 2400 which is like 4 percent from current levels. Otherwise also, one can just unwind 2400 call and exit out of this trade. The maximum loss is Rs 4 in this trade and one can make as high as Rs 100 if SBI goes closer to Rs 2500 levels.