Nifty may see 5900 again, stay invested: Aditya Birla Money

In an interview to CNBC-TV18, Hemant Thukral, National Head-Derivative Desk of Aditya Birla Money spoke about the outlook for the F&O market and recommended various stocks.

Below is a verbatim transcript of the interview: Q: From a trading perspective how is it looking after the gap down that we are likely to see today, where would you expect the supports to kick-in for the Nifty? A: Market is in that 150-160 points of range. On Friday, we could not cross that barrier of 5,920-5,930 on the upside which could have given a bigger breakout. On the downside, 5,750 will act as a very strong support for Nifty. So traders have to continue to trade in this range unless until we come out of this range. Today also, if Nifty gives you a gap down opening, please hold to your long positions if you are already long with a stop loss of 5,750. If 5,750 is hold up then we will retest again 5,900-5,930 very shortly on the upside. Also, if you have booked profits around 5,900 then it is a right time to re-enter if you get a chance around 5,810-5,815 today with a stop loss of 5,750. So 5,750 would be kept as a benchmark support or a stop loss for all the long positions. Till Nifty does not crosses 5,930 on the upside, we will remain in this range. For today, I will still stick to my long positions and continue to hold them. Q: What is the problem with the Bank Nifty though in the context of a market that has been quiet, the Bank Nifty was down more than a percent and a half last week, what kind of positions are being built there? A: That is the basic issue, which we are facing currently because Bank Nifty is not helping Nifty to move up. In fact, if you see sector wise, it is Bank Nifty which continues to act as a big drag on Nifty. Unless until Bank Nifty convincingly crosses 11,500 and sustains above it, I do not see it going up and testing 11,800. On the downside, it will find support again on the lows that it had formed around that 11,050 mark. So that will be crucial for Bank Nifty. However, going forward also except for barring HDFC Bank as a bank, which has seen some buying coming in, I do not see the bigger banks participating in the rally. I am more bullish on the other sectors. It is just that Bank Nifty should not fall below 11,000 otherwise we will face a problem at Nifty level also. Q: IDFC had an interesting move on Friday, do you think it is good for more this week? A: Yes, basically there are two reasons why I am suggesting a buy on IDFC. The open interest (OI) got unwound by 13 percent that means it was a pure short covering rally on Friday. But still the way the positions were rolled, week-on-week there are around 10-15 percent more short positions till open. Secondly, the stock is trying to form a bottom around a new 52-week low that is Rs 119-120. From last seven-eight days this was trying to consolidate and on Friday it tried to move above that Rs 125-126 levels. So in immediate short-term, if you get a gap down today and you are able to get around Rs 125-126 keeping a stop loss of Rs 120, it will try to test the next support levels, which it had given away on the way down. That is Rs 135-136. It would be my target on IDFC. So another Rs 10 move from Rs 125, which will account to 5-6 percent move, can be seen on the basis of more short covering coming in this counter. Q: How would you trade something like an Infosys in earnings week? A: The way the OI is being added up on Friday as well as the whole last week and the way the cost has moved up, people are building long positions. If you see 2,400 Put writer, it is being consolidating and accumulating there. So, a lot of support for Infosys is around Rs 2,380-2,350 mark on the downside. On the upside, the real resistance will start around Rs 2,535, which is the 200 days moving average (DMA) of Infosys. So, if we get some dip today, it is a buying opportunity. Keep a stop loss of Rs 2,380-2,400 on it and a target back up to Rs 2,530-2,540.