Nifty may see 5920; remain long: Aditya Birla Money

In an interview to CNBC-TV18, Hemant Thukral of Aditya Birla Money spoke about the current trend in F&O market.

Below is a verbatim transcript of the interview:

Q: What is your sense of how many outstanding short positions still remain on the index and how much more short covering there could be?

A: On the rollover day in our discussion, I said that a lot of short positions have been rolled into the system. That is why the pullback has been so sharp.

Importantly, a lot of short positions have been accumulated around this 5,950-5,900 belt. For any reason, if we manage to cross this level of 5,920 then we should not be surprised if we cross 6,000 on the upside because the short covering itself will take that momentum on the upside.

We will find a lot of support around 5,750. So, if you are holding long, revise your stop loss on the upside to 5,750 and continue to hold.

Even if you have not gone long, you should try a fresh long around 5,820 because today will be a subdued opening seeing in the Asian markets. So 5,750 should be kept as a stop loss keeping a target of 5,920 in mind.

Q: IFCI had a good run last week, you expect more follow-through on the upside there?

A: Prime reason is that a lot of short positions are still open in the rollover side in financials, especially the midcap side of the business. In all midcap public sector undertaking (PSU) banks we saw a lot of short covering. However, IFCI saw fresh long built up on Friday, around 2.5-3 percent open interest (OI) has been added up.

Importantly, the stock is not trading above that Rs 24 mark, which was acting as a slight resistance because it was consolidating between that Rs 22 and Rs 24 mark. I will keep the stop loss at Rs 24. Now it should retest 50 days moving average (DMA), which is around Rs 27.50-27.70. So in short-term, momentum will be maintained and you can expect another 10-15 percent move in the stock in next two-three trading sessions.

Q: You have a strategy on Infosys today?

A: Yes. Infosys is another stock, which can do good from these levels. Technically also it has managed to close above Rs 2,450 mark, which was a stiff resistance for it. It is backed up by good 5.5 percent OI being added up on Friday.

Q: We have seen some diverse trends in the pharmaceutical space. Last week Sun Pharmaceutical Industries was up 6 percent but Ranbaxy Laboratories was down 12 percent, would you trade either of these stocks?

A: On Friday we saw maximum OI being added up in Dr Reddys Laboratories and the way Dr Reddys Laboratories closed above Rs 2,010 it has made a new 52-week high. So it should move towards Rs 2,080-2,090 levels.

I would not trade Ranbaxy Laboratories at all on the long side. In fact I will just wait for any pullback to go short. The stock has given away all support levels on the technical front and also I have not seen major short covering coming in because it was oversold. So I would be looking to short around Rs 325-330 levels in Ranbaxy Laboratories.