See strong resistance at 5150-5200, sell on rise: Bhamre

Siddharth Bhamre of Angel Broking sees 5,150 and 5,200 as strong resistance levels for the Nifty now and doesn't expect the market to breach them. "We are on the higher side of the range probably we will drift down to 4,800. So our biasness continues with sell on rise," he said in an interview to CNBC-TV18.

If Nifty climbs back to 5,120-5,150 then one should create short positions and hold on to them. However, if Nifty slips to 4,900 or 4,850 book profits and move out, he suggested. Below is the edited transcript of Bhamre’s interview with CNBC-TV18. Also watch the accompanying video. Q: What are you telling your clients to do now on the index after yesterday’s reversal? A: Last 10 days have been bit frustrating and embarrassing from derivatives perspective. The reason being we were contemplating that from May to June FIIs have rolled over huge amount of Bank Nifty short positions and despite run-up from 4,750 to almost 5,200 we didn’t see any form of short covering in Bank Nifty by them, so it was difficult to change the view. Now in this bounce back we have seen that there is huge amount of long built up happening in Nifty futures. So the market is poised in such a way that people are short in Bank Nifty and long in Nifty and this includes FIIs also. We have seen last week good amount of built happening in Nifty along with Rs 1000 crores buy figure by FIIs. In yesterday’s session also if we look at FIIs statistics the figure is hardly Rs 200 crores of buy figure in index futures, but the open interest has significantly increased. This again indicates that there are some FIIs who are shorting market at this point of time and there are some FIIs who are buying. Very important development is from the IV perspective despite not significant volumes we have seen decline in IVIX post the event and as expected 17th June has more or less become a non event for the market and now people are talking about spin. One more important observation from F&O perspective is unwinding in 4,600 put option, 47,500 contracts almost got unwounded yesterday. We were expecting that in June series one would see 4,600 or 4,500 levels in beginning of series that view has now gone out of window. Taking all this data into consideration and the way market has been optimistic about all the news flows be it QE3 expectations or LTRO III or the rate cute where the disappointment has come, I believe that resistance of 5,150 and 5,200 has gained further importance and strength now. We don’t except market to go above those levels. We are on the higher side of the range probably we will drift down to 4,800. So our biasness continues with sell on rise. If at all you see levels back again to 5,120-5,150 create short positions, hold onto short positions which are generated around 5,150. But don’t expect 4,500-4,600. If you get levels of 4,900 or 4,850 book your profit and move out. Q: You spoke about the Bank Nifty earlier, after yesterday’s fall what are you telling your clients to do there? A: Hold onto short positions over there. There are big FIIs and quite large ones who have shorted Bank Nifty and despite market going up significantly they have not covered up their positions. If we look at the built up in May series and look at the weighted average price their cost that is their levels of shorting Bank Nifty is around 10,200-10,300. We saw Bank Nifty going to those levels. The market always will have some reason to correct so you had this monetary policy disappointment which resulted into that correction. I believe you might see levels of 9,200-9,000, I don’t want to talk levels beyond that, but as of now I think a revisit of 9,000-9,200 is quite likely. For Bank Nifty we have seen formation of short positions yesterday unlike in stocks where most of the stocks have seen unwinding, Bank Nifty has seen formation of short positions, so I would continue my negative biasness in banking stocks, but this time I would just reduce my negative stance. I won't expect sub 9,000 levels but 9,000 to 9,200 levels.