Nifty to go down post pullback: HDFC Sec

In an interview to CNBC-TV18, VK Sharma of HDFC Securities spoke about the outlook for the F&O market.

Below is a verbatim transcript of the interview: Q: How is it looking in your part of the market and what kind of a trading stance are Nifty traders taking now? A: If we were to go by the kind of positions that people have taken yesterday, they continue to be bearish. Although the Calls and Puts are structured around 5,700 and 6,000 strike price in the Nifty, yesterday we did see Puts being written to a lower level of around 5,600. That is not what is going to drive the market because there are a lot of short positions and the long positions are very scarce. From that perspective, short covering and the way the international events are folded out, will drive the market today. To the extent, these short coverings happen and the speed with which they happen will determine the market. However, the market has 100 points rally in its face. Q: Do you think post a pullback rally, market will resume its downside again in the June series? A: That is what it looks like because currently 5,700 is the level at which the Puts have been written for the whole series and yesterday we did see 5,600. With a clear stance that the rates are not going to be cut, there is very less elbow room for the markets to go up. So, if the market goes up to 5,900 levels - for the current series it looks like a level at which people should start writing Calls. Q: How would you trade the Bank Nifty and within that any specific bank calls that you have? A: At this point of time, Bank Nifty is not one of the strongest plays, although, it might go up merely because State Bank of India (SBI) is going to lead from that front. It is better to look at SBI. There are a good amount of Calls on Bank Nifty, which are written at 12,000 levels, so that is going to act as a resistance but positions need to be built with caution. SBI has been a pillar of strength of the entire market. Yesterday when the markets fell in the morning, it did not make a new low on the Bombay Stock Exchange (BSE). That gives us added strength and yesterday although the positions were reduced, shorts didn’t happen. The stock price went up by 1 percent, so I am suggesting buying 2,050 Call at around Rs 50, the stop loss at Rs 35 and target at Rs 80.