F&O: Nifty to test 6150 in Jan series, says ICICI Direct

Amit Gupta of ICICI Direct expects Nifty to test 6,150 in the January series. The Nifty moved up by 41.25 points to 5,992 levels in morning trade today. According to many brokers, the sentiment remained strong on sustained inflows from foreign funds into equity market amid a firming trend in the Asian region as US poised to avert fiscal cliff.

"The January series is a long one and in such a scenario, in 70-75 percent of the sessions, the market remains range bound. The directional move comes either in the first week or possibly towards the end of the month. Nifty has crossed 5,900 and now it possibly heading towards 6150," Gupta said in an interview. Below is the edited transcript of Amit Gupta’s interview with CNBC-TV18. Q: From 6,000 onwards how do you map the rest of the January series? A: 6,150 is likely to be tested in January series. This series has been really a long one. It started before January 1 and is going to close at almost at 31 January. Generally, when the series is so long, in 70 or 75 percent sessions, market remains range bound. The directional move comes either in the first week or possibly towards the end of the month. The directional move has already started for the time being. It has crossed 5,900 and now it possibly heading towards 6,150 kind of levels. In the Options data, 5800 Put has the highest base and 6000 Call still has the highest base, so this was the range. But we feel that 6000 Call does not have that kind of strong hands because it is more of positions, which have been rolled from 5800 Call Options to 6000 Call Options. In the last series, I understand that they have made little bit of money after rolling positions, because market expired below 6000. But now they are getting more vulnerable and it is possible that Rs 100 of premium at which 6000 Call has been shorted, market may push them towards and the market may go upto or even beyond 6100. US VIX moved up by almost 50 percent before the fiscal cliff announcement, has also come down drastically. There people had formed long Call and long Put kind of positions in anticipation of some directional move, but the law of averages comes to play and I do not think when majority of people go in one side, they start making money. S&P may also go under some range bound scenario. Q: How are you trading the Bank Nifty? A: I think 12,500 was very critical. This was one of the highest Call base which was taken out in yesterday’s session. So I will remain positive in Bank Nifty till it is not closing below this level and the likely target is the next highest Call base, which is at 13,000 only. So I think there is a possibility of another 400-500 points of rally in Bank Nifty. Q: Your midcap pick is Apollo Tyres today? A: I think it has consolidated a lot after the last quarterly results. There was news that the promoters may dilute some stake, so some volumes were seen in the last quarter around Rs 90 levels. It came down till Rs 79. In this upmove, almost 50 percent of short positions have been closed. So my sense is it is going to move towards Rs 98. It will take out Rs 90 very soon and hence  it is a buy on declines.