Key resistance for Nifty at 5950 in May: Hemant Thukral

In an interview to CNBC-TV18, Hemant Thukral, National Head-Derivative Desk at Aditya Birla Money shared outlook on the market.

Below is a verbatim transcript of the interview: Q: What are you expecting to see on expiry day today and what kind of rollovers are you advocating for the May series now? A: If we do open above 5,900, I would like to book profits if I am still holding long in Nifty. There are two-three reasons behind it because all the short covering basically has been done. I do not see any major short rollovers in any of the stocks. Even if the stocks are of the sectors like capital goods, there also more or less all short covering is done. Virtually everybody who is long will be rolling over their positions. Talking about today, I am expecting some Volume-Weighted Average Price (VWAP) selling to come in the later half of the day. It may have an effect of only 30-40 points but at least it will be more on the selling side because I do not see any short except for IT where there are some short rollovers -- apart from that any of the sector I do not see any shorts being rolled. Even if we check the options positions, going forward in May 5,950-6,000 should act as a stiff resistance zone for us because highest open interest (OI) is in 5,900-6,000 Call. I do not advise people to keep holding longs around these areas. I would only go long if it comes down back to 5,750-5,770 zone then one should start to reenter. The best rollovers are in banking stocks that is one thing which is suggesting long rollovers especially in the private bank side and then auto has started picking up which is another side of the business. All interest rate sensitive sectors have suggested good rollovers clearly expecting a good rate cut on May 3. Q: Once the expiry is done, how would you trade the May series now, would you start taking profits in some of the sectors which have generated good returns like banking and autos or do you want to keep long positions open even into the next series? A: For sure, I would keep my trialing stop loss levels being pushed up and look out for individual stocks. Having said that, if I am carrying position in Nifty, I would trail my stop loss straight away to 5,880 because if any case I go below 5,850 or 5,880 then I will head towards 5,760-5,700. So, if you are not booking profits, I would advise to keep the trialing profits moving up. In Nifty, my trailing profit would be at 5,850-5,880 depending upon how much profits I am making. Any move below these levels, we should revisit 5,700-5,750. Q: Speaking of the banks, you have a strategy on Karnataka Bank today? A: Yes, all the private midcap banks have shown good rollovers and one of them would be Karnataka Bank. Technically also, this stock has made a very strong bottom around Rs 141-142 zone. In immediate short-term, the stock may revisit the resistance zone of Rs 164-165. Traders can go long on this stock with a stop loss. I will keep my stop loss at Rs 141 for Karnataka Bank long. I would even suggest that IndusInd Bank and Kotak Mahindra Bank have gone with very heavy long rollovers. If you are already long in either Kotak Mahindra Bank or IndusInd Bank, you can continue to hold long but for fresh, Karnataka Bank is a good choice. Q: At the end of this series, Wipro and Infosys are down 20 percent, Tata Consultancy Services (TCS) down 9-10 percent, what have you seen on some of these stocks? Is there a rollover of shorts over there or have people closed positions? A: This is the only sector where rollovers are on the short side. I see the pressure to continue even as we enter May series. There will be some bounce backs, Infosys may revisit Rs 2,300-2,350 levels but at higher levels, you will continue to see selling pressure. The rollover cost has come down clearly suggesting lot of shorts. Even a stronger stock like HCL Technologies has seen short rollovers. IT will continue to be a slightly underperforming sector going forward in May series also. Q: You have a strategy on HDIL as well today? A: That is a midcap real estate stock, which has still some shorts outstanding. If Nifty has to move up or the rebound remains strong, momentum can be seen in this stock. In immediate short-term, I feel the stock can revisit Rs 64-65 levels. Even if people want, they can go long in May series. I will keep a stop loss at around Rs 51 levels. However, in immediate short-term I expect a movement of at least 5-7 percent in HDIL.