Nifty unlikely to break 5838: VK Sharma, HDFC Sec

VK Sharma of HDFC Securities spoke to CNBC-TV18 about his views on Nifty.

Sharma said, "The market is finding a lot of trouble in terms of going beyond the level of 5950." Also Read: See downside target for Nifty at 5730: Sukhani Below is the verbatim transcript of Sharma’s interview on CNBC-TV18 Q: What is your approach to the index after what we have seen these last few days on the Nifty? A: The market is finding a lot of trouble to go beyond 5950. The 5965 level that it saw for a day was just an eye wash. From that perspective, there is not enough in the market to ensure that we do see a close above 5950. However, the developments that happened yesterday, after the markets closed, do warrant that the market is unlikely to break 5838 levels which it saw on the December 6. So selectively, you will have to buy stocks which tend to benefit from the policy decisions that the government has taken. Overall, my sense is that the market will still continue to be range bound. I would be willing to buy with a stop loss of 5820 if the market drips down after the early rise. You can never be very sure till it closes above 5950. Q: Cement has started reacting after a very good run. Do you think there is more downside in names like ACC and Ambuja Cements? A: Although it has nothing to do with how the industry is doing, but selling pressure in ACC and Ambuja Cements is mainly due to the royalty that the promoters are now demanding. From that perspective, if you are holding these stocks in large quantities, then you should essentially buy puts. So I recommend buying Ambuja 200 put at around Rs 2 and 1400 put in case of ACC at around Rs 28. Keep a stop loss of Re 1 in Ambuja and around Rs 15 in ACC. You could then hold on to your stocks if you have these puts in place. Q: How would you trade IRB Infrastructure? A: IRB Infrastructure Developers would be a clear beneficiary of the land clearance bill approved by the cabinet committee. The stock had done well but from the last three days it is participating in the bearish trade. But, it is only giving up some of the large gains which it had made earlier. It is a speculative buy so I suggest buying the 140 Call here at Rs 3, keep a stop loss at Rs 2 and you can hope to make around Rs 3 on this almost doubling the call in case the stock does go on the upside. Q: Do you have a trading strategy on Idea Cellular? A: Due to the fact that fees for 2G auctions were cut after the markets closed, I suggest buying a 95 Call in Idea Cellular at around Rs 2.9 with a stop loss of Rs 2 and hoping to sell it at Rs 6. Similarly, Bharti Airtel also is likely to do well in the morning then going down it will have to go up first. Q: From the banking space, would you have any banks on your list which you think will correct more because yesterday we did see some of these PSU names correct quite a bit? A: More rating agencies have come down on some of the PSU banks. Canara Bank for instance is one in which further downgrade has happened. So, although I don’t read too much into these agency downgrades, but the fact is that if you are holding this stock, not for trading, but if you are holding this stock in a large quantity then I am suggesting buying the 460 put which was available at Rs 10 and keep a stop loss at Rs 6. If you are just holding on for the rest of the series you might, as well not keep a stop loss, you just hold on and just for insurance purposes. This is a stock which will go up once the interest rates are reduced because it has a large amount available for sale in its bond holdings.