See no reason to be bearish on market: Aditya Birla Money

Hemant Thukral of Aditya Birla Money sees no reason to change his bullish stance on the Nifty despite Friday’s sell-off. "I still feel that market will find support around 5600-5650, not even lower than that," he told CNBC-TV18 in an interview. Thural says the range is around 5630-5650 now. "Buy it and keep a stop loss of 5590 with a target towards 5830. But beyond that, I think the targets will be seriously stretched for November series," he recommends.

On Friday, he says, call writers were aggressively active at 5800, which is now the new resistance for the November series.  Below is an edited transcript of the interview on CNBC-TV18. Q: Would you buy these dips on the Nifty? Do you still maintain your bullish stance for the rest of the November series?
A: From last three weeks, we have been maintaining our bullish stance and I do not see any reason to change that. I still feel that market will find support around 5600-5650, not even lower than that. But the point here is what has happened on Friday is that call writers have gone very aggressively active at 5800. So for me now 5830 will become a very serious resistance for this November series. Even though the range has slightly gone on the upside—an upside towards 5800-5830—I would seriously feel very surprised if we cross 5830 without a resistance.
Now, the range is around 5630-5650. Buy it and keep a stop loss of 5590 with a target towards 5830. But beyond that, I think the targets will be seriously stretched for November series. So I think November series we may continue in more of a range bound mode, but the range will be still better for the traders than the October series, because I am expecting the range of 150-200 points at least. Q: You have a sell call on Tata Steel. Fundamentally, it has reported a really weak set of numbers. Technically, where is it headed?
A: What we have seen Friday is that Tata Steel has seen huge shorts being built-up. Obviously it is immediate result reaction. For me important is that Rs 420 call-writers were holding on the positions, which have shifted south very aggressively towards Rs 400.
Now we have a huge bar of call-writers at Rs 400. So that means Tata Steel will face a very stiff resistance to cross Rs 400-405 on the upside. I am looking for a much lower target. So any slight rebound also should be used as a selling opportunity with a target towards Rs 370-365, which has been previously also a very strong support zone for Tata Steel. But the stop loss has to be maintained for traders around Rs 404-405 levels, which I feel will act as a very, very stiff resistance for the counter now. Q: What about Ashok Leyland? It was the star on Friday. Do you see more upside here?
A: Yes. I feel that stock has given a very good breakout and after a very long time I have seen call-writers have to shift their positions. There was aggressive writing on Rs 25 calls and they were forced to unwind their positions on Friday. And not only that, the 26 percent addition in open interest has come with an increase in cost.
Clearly, long positions added up there. If a trader can keep a stop loss around Rs 24.50-24.60 levels I think Ashok Leyland has the power to go up to Rs 27-27.50 levels. So I think any dip today, because it had moved very fast on Friday should be used as a buying opportunity, but do keep a stop loss at Rs 24.50.