F&O: Won't long Nifty now; buy Axis Bank, says HDFC Sec

In an interview to CNBC-TV18, VK Sharma, Head Private Broking & Wealth Management of HDFC Securities spoke about the current trend for F&O market.

Below is a verbatim transcript of the interview:

Q: How would you approach the Nifty first, would you play for a bit of a bounce or are you looking for a shorting opportunity in that strength?

A: The Nifty has great support at around 5,930. Generally, the expectation in the market is that if we do see a close below or at this level, we will have a reversal of those positions and people would then start going short. I would not buy the 10 point rise that we are going to see neither I am going to buy the 30-40 points high.

We will wait for some more time to clarify. Till Bank Nifty per se comes back and gives you a revival, it will continue to be attract on the overall Nifty. If I do have to trade, I will rather go short on the Bank Nifty after a 100 point rise in the Bank Nifty rather than going short on the Nifty at this point of time. I would not go long in the Nifty.

Q: You would still short an Axis Bank despite the price destruction of yesterday?

A: The charts are broken and despite the price fall, the open interest (OI) continued to be added. While it looks difficult why somebody should sell a private sector bank, the strategy can be used for those investors who are holding Axis Bank just to protect themselves and traders need to have a stop loss. My strategy in Axis Bank is to buy 1,220 Put at around Rs 24, keep a stop loss at Rs 16 and hope to sell this at around Rs 40.

Q: Big support for the market till a couple of days back was oil and gas. Are you still seeing some kind of long additions there or is that space beginning to falter again?

A: In oil and gas, we did see some positions being pruned in Reliance Industries Ltd (RIL). But the stock is still holding up.

In case of Oil and Natural Gas Corporation (ONGC) again some mild shorts were built. That is one sector, which will be now buoyed by RIL. It will delay the further fall in the oil and gas space. Therefore I do not think we need to take more shorts there.

At some point of time, if the Nifty does crop up more than 50 points on the higher side, RIL could be a stock, which could lead this up. However, I am not going to buy any rise in the Nifty neither RIL at this point of time. I will rather seek any weakness in the Bank Nifty. If it starts falling after rising 100 points, I would rather build positions there.