Nifty may retest 5200; won't short now: Aditya Birla Money

Hemant Thukral of Aditya Birla Money, in an interview to CNBC-TV18, shares his reading and outlook on F&O market.

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Below is the verbatim transcript of his interview on CNBC-TV18

Q: We are down to 5300. What next for the Nifty before expiry?

A: Wednesday was one of the worst market days. We all felt market has stabilised after the downward cut to 5300, moved back to 5490. We were still expecting some correction, but I doubt anybody was seeing the intensity of the correction from higher levels again.

Now, I do not want to recommend any fresh shorts in Nifty at these levels. Two prime reasons, India VIX has now reached 17-month high, so the uncertainty is at a peak level currently. Second, the foreign institutional investor (FII) data has started giving signals that now Nifty Futures selling may halt at these levels. Yesterday they were buyers after seven consecutive days of selling of Nifty Futures, so that suggests that maybe the downside is very limited from hereon.

If Nifty bounces back and sustains above 5330 then only we can expect it to go back up and retest 5450 on the upside. If it crosses 5330 then I would like to go long for a pullback rally. At current levels, I am not ruling out another 50-60 point downside, maybe we have to revisit 5200, but I would not like to go short at these levels, because market is now grossly oversold.

Q: You have a buy on IndusInd Bank, it bucked the trend yesterday. Do you see some more on the upside today?

A: In yesterday's data, Yes Bank and IndusInd Bank were the only two that actually saw short covering on continuous basis till the end of the day. I am keeping apart the HDFC Bank from hereon. Rest all actually lost open interest (OI), build further shorts.

If Bank Nifty can hold 9150, IndusInd Bank can be one of the outperformers hereon. IndusInd Bank technically has built up a very strong bottom around Rs 345-350 zone. So at dips, I would like to accumulate that, keeping a very tight stop loss of Rs 345 and an upside target of Rs 375-380.

Q: The Anil Dhirubhai Ambani Group (ADAG) was under pressure, do you have a sell on Reliance Power today?

A: Yes. Across the board ADAG Group saw fresh shorts being built up. RComm also saw 15 percent shorts, but RPower saw shorts and has also given away very crucial supports on the downside. It was holding up Rs 66-67 levels for a very long time as a strong support. Yesterday it closed below that and in immediate short-term it can retest Rs 62 and then Rs 60 levels. I would like to play with a very tight stop loss, because market is oversold. I will keep a stop loss of Rs 68 for RPower today.

Q: If we get a pullback, do you think it will be one more of those attempts to get to 5500 zone after which the market may start falling again? We saw a pullback yesterday which took us to 5500, but it does not seemed to be sustaining, are you talking about a trading pullback or something more meaningful?

A: It will be more of a trading pullback if Nifty does sustain above 5330. Now few technical angles will also come in. Next week is expiry and we have huge short positions that are open in the system. I hardly know any stock where a long position is open. So, you will see some pullback coming in even if we have to go for a short rollover in the next series.

I will be surprised if the trading pullback goes above 5450 or 5500 within this series. If it can cross 5500 then we can see more legs, but right now I am only expecting a trading pullback in market.

Q: Any formations that you are seeing in ITC now?

A: ITC is another high quality stock. Yesterday 31 percent fresh shorts have been built up. More surprisingly it has gone below Rs 300 mark. So now the next support lies around Rs 285-290, that is an area which is a cause of concern.