Dec series: Angel Broking sees Nifty's resistance at 6000

Siddharth Bhamre of Angel Broking expects the Nifty to witness resistance around 6,000 levels.

"Call writers have become active in 6,000 strike whereas the put guys are still languishing around 5,500-5,600 level, so the floor remains. But the ceiling of 5,750-5,800 has now gone up to 6,000 levels," he explained in an interview to CNBC-TV18. Below is the edited transcript of Bhamre’s interview with CNBC-TV18. Q: Do you see the close above 5,800 mark on the Nifty? A: Quite likely to happen. That was not our stance in morning, but then the way market has run up we are forced to think that way. From the last couple of days we were mentioning that how the market and the rupee movement has forced us to change our negative stance on the market. But we were not anticipating 150-160 points upside move within two trading sessions. Despite the market consolidating when global markets were going up and despite the rupee depreciating, there was no selling by FIIs. Now this entire situation had become favourable for FIIs to put in money. In Tuesday’s trading session we saw that they have invested more than Rs 1,000 crore in cash market segment and equivalent amount in F&O. The 5,600 and 5,700 call options saw a huge amount of unwinding on Tuesday, but we all know that traders have been writing 5,800 call option as well and we have not seen unwinding there as of now. It is quite possible that the bulls who have surprised people like us by taking 150-160 points in Nifty in two trading sessions would continue to surprise in last one hour also by taking this market probably above 5,820 or something like that. What a lot of people are doing right now is they are selling 5,800 call and put in an anticipation that market would close around these levels. Do not expect correction, but probably expect a last minute upside again, which might take us probably to 5,820 or above levels and which would lead into losses to those people who are selling 5,800 call and put today. So expect last minute surprise again on the upside. Q: What would your call be then for the December series? A: It is difficult to take a call, but what we are seeing from the options front purely is nothing to mix with what is happening globally or in the currency markets. Call writers or buyers have become active in 6,000 strike as well whereas the put guys are still languishing around 5,500-5,600 level, so the floor remains, but the ceiling of 5750-5800, which was there for last two series has now gone up to 6,000 levels. There are option guys who are making some kind of attempt for the market to reach to those levels. But right now we need to see whether this rupee appreciation and FII buying would continue or not. We need to see that and then probably on dips we would initiate a buy on this market. Right now our call of dips coming into market has not materialized. We are just waiting and watching. Fortunately, we squared off our short positions couple of days earlier. Q: What are you spotting with regards to banks as well as the Bank Nifty? A: This is one space in which there are lots of short positions. A couple of days back the rollovers were very less and now we are seeing heightened activity of rolling over. It is quite possible that in the new series also the Bank Nifty starts on a positive note, 11,800-12,000 is a strong resistance zone. It looks like there is a breakout in Bank Nifty, so the momentum would be there. I would concentrate on Axis Bank because there are lots of short positions and PSU names like SBI, PNB, Canara Bank where lots of short positions have been accumulated. In the last two trading sessions Bank Nifty has led this rally both in the form of a formation of long positions and short covering. I believe there are still lots of shorts, so rather than the Nifty I would prefer Bank Nifty. Q: What is happening on the auto space? We have seen some diverse moves. Tata Motors, Bajaj Auto are holding up with 4.5 percent rallies, but Hero MotoCorp and Maruti Suzuki are under pressure. What is the movement in all these stocks and what would forecast for these stocks in the next series? A: Hero MotoCorp has been an underperformer. The stock has seen recent upside because of short covering. It looks difficult for the stock to cross Rs 1,900 in any hurry. It was surprising that how Maruti Suzuki has managed to move up till Rs 1,500 but Rs 1,500 is strong resistance. We are seeing some kind of correction, but the way markets are panning out and way people are preferring four wheelers especially Maruti for reasons best known to them, do not expect continuation of this fall in Maruti. I am no initiating any buy in Maruti, I am still sceptical over there, but the way people are preferring it, I believe it is just matter of couple of days, we will see it back to Rs 1,500 and probably above those levels.