Nifty may see 5500 in June series, cautions Angel Broking

In an interview to CNBC-TV18, Siddharth Bhamre of Angel Broking spoke about the current trend in F&O market.

Below is a verbatim transcript of the interview: Q: You guys have been relatively optimistic about the market, is that view changing around? A: That view has changed because first we were optimistic because foreign institutional investors (FIIs) were unwinding their positions and we did not see any formation of short positions in F&O segment. Also, we were thinking that support of 5,700-5,680 would hold from where markets bounced once, . In earlier part of last week when that support breached, we changed our view and we had formed negative base strategies, though not exactly short future but option strategies, which are negatively biased. The way FIIs are shorting this market and cash base selling is happening, there will not be any respite any time soon. 5,500 to 5,450 looks likely in this series. You might see a day where there might be a bounce or stagnation in which probably you can think of buying some stocks rather than buying index. At the same time, I want to throw some light on some discussions, which were happening. When Put/Call ratio (PCR) goes from 0.85 to 0.75, there is a huge crash in market. Historically, if you check very few instances has happened. In 2008 when this has happened couple of times once in October and once in February, PCR has not gone down to 0.75, it has gone down to 0.41. We are not expecting such kind of selling pressure happening now because there is a difference between historical data and now in terms of the open interest (OI) of weaker hands in market in future segment. People are not leveraged so do not expect that sharp correction of 10 percent happening immediately when PCR goes down from 0.85 to 0.75. Having said that, I am not saying that this is a bullish market and you should buy at this point of time. We are expecting further downside, we have changed our view from 5,700 and we remain negative on the market. Q: What do you see on some of the private sector banking names in your part of the market? A: Yesterday, it was more of public sector undertaking (PSU) banks, which led to fall and some of the private sector banks have been stable. We have picked up ICICI Bank for a couple of days. For last two trading sessions, markets have corrected but this stock has been fairly stable. In the cash based volumes, the stock has slightly inched up. There are a lot of short positions, which got created when the stock started correcting from Rs 1,145 to current levels of Rs 1,040-1,050. In today’s session if there is a percent or half percent dip, one can go long, fix a small stop loss of Rs 1,008 and expect a bounce, which may take this counter probably till Rs 1,100 and not beyond that. We are just looking at 4-5 percent bounce and we are trying to play on it. Rather than searching shorting opportunity when you have missed out on it at such lower levels, expect a bounce and then short. Some stocks in sectors would show strength and ICICI Bank for next two-three trading sessions may show some strength. Q: If there is a temporary pullback of one-two days, what kind of levels do you think that might take the index to where you will be comfortable opening up some kind of a bearish position again? A: We are not expecting market to move significantly above 5,720-5,750 levels. If we see some bounce, it would be a shallow bounce where you do not form positions in index. In stocks you might see 4-5 percent return but index may not see that kind of returns. If we get 5,720 to 5,750, we will be happy to short this market.