See November expiry between 5660-5680: ICICI Sec

The November series so far has been largely rangebound and TS Harihar of ICICI Securities said he is currently looking at a range between 5530 and 5680. He expects the expiry to be somewhere around 5660 to 5680. Harihar also sounds a word of caution and says, if problems in Europe get inflated, the Nifty may even break the 5530 range.

As far as the Bank Nifty is concerned, Harihar feels the private and public sector banks are moving in different directions. Therefore, he suggests to go long on private banks and short on PSU banks.

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

Q: It has been a fairly range bound series so far and long one at that. What kind of expiry do you expect to see for the November series next week?

A: Currently we are looking at range of around 5530 which has proved to be very strong support on the downside and about 5680 on the upside and our expectation is that the expiry should actually be somewhere in the range of around 5660-5680. That seems to be the expiry range at least at this point in time.

The only concern is if the problems in Europe get a little inflated, it probably can even break the 5530 range. But, I think that seems to be a fairly remote possibility at this point in time. We expect the expiry to be in the range of 5660-5680.

Q: The banks came back yesterday in trade. Any recommendation or strategy on the Bank Nifty which you guys have going?

A: I have been holding this view for the last few weeks that the whole problem with the Bank Nifty is that there are two groups of banks which are absolutely working in diverse directions. There is a private sector banks’ group which has been trading positively. Every dip is being used to buy in.

On the other hand, there is a public sector banks’ group led by the State Bank of India wherein every rise is seemed to be met with selling pressure. I think in this kind of a scenario it does not make too much sense trying to guess the Bank Nifty overall, but rather we do a long-short. We are long on the private banks and short on the PSU banks per se.

Q: Amongst the tea stocks, you have got McLeod Russel in your list as well this morning.

A: Yes. We have been seeing some very interesting accumulation happening in McLeod Russel. It has been consolidating in the range of around Rs 310-320 for a fairly long time.

We think this particular stock based on the data seems to be very delicately poised, as far as upside breakout is concerned. We have a target of around Rs 350-355 within one month. About 10-12 percent upside is what we expect in this stock in one month's timeframe.

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Q: You are buying Reliance. What is the call on that one? Is this going into the next series that you see strength, because it has not moved too much in this one?

A: We see a very interesting trend in the market. Three stocks which used to be erstwhile champions - Hindustan Unilever, Infosys and Reliance have just gone out of the perception and the mindshare of people. Reliance has been consolidating in the range of Rs 770-790 for a fairly long time. We believe it is very close to its long-term supports.

Probably you run the risk of another Rs 20-25 down from here, but if you take a three months' perspective, Reliance is one stock that has gradually started seeing accumulation both on the spot and the futures. I think we have a target of around Rs 860 with a three months' perspective. I do not expect things to happen either in this month or even in the first half of the next month. But, once this market breaks above 5680, the run from there would be led by stocks like Reliance Industries and Hindustan Lever.

Q: Any specific stocks that standout where you are seeing shorting pressure now?

A: A few of them. Tata Steel is one stock that has seen consistent shorting. It has started around Rs 405 level and down to about Rs 370-360. The shorts have been consistently building.

Tata Motors is another stock. There have been a lot of players in the market who have been doing a long-short, long on Mahindra and Mahindra and short on Tata Motors. So Tata Motors is the second stock that is seeing a lot of short build-up.

The third unfortunately happens to beState Bank of India. Ever since the last quarter results turned out to be disappointing from around Rs 2,250 levels, we have seen it consistently getting shorted down to Rs 2,060. I think these are the three stocks among the large caps that tend to standout as far as the shorts are concerned.