Aditya Birla Money sees Oct expiry at 5650-5680 levels

Hemant Thukral of Aditya Birla Money expects the October series to close at around the 5650-5680 levels. "I do not see market giving away 5600 levels within this expiry. Even going forward in November series the way 5500 and 5600 puts are placed, I have a feeling that Nifty will form a bottom around 5550," he told CNBC-TV18 in an interview.

Thukral advises going long on the market right now. For the November series, he suggests keeping a stop loss of 5550. And for current series, 5630 cash level should be kept as the stop loss level. Below is an edited transcript of Hemant Thukral's interview on CNBC-TV18. Q: What is the expectation? Where will the series expire this time around? Do you think it could be around 5700 level or are we headed much lower?
A: The Nifty has been consolidating very well. From the past one week, it has been showing 100 point movement but we have not given away 5630.
The way option writing positions are placed, I do not see this breaking out in any case - neither 5630 is giving way nor an immediate crossing of 5730. We may close around 5650-5680.
Going forward, in November series the way 5500 and 5600 puts are placed, I feel that Nifty will form a bottom at around 5550. Nifty may not go below 5550, but can breach 5750 and test 5800. Obviously, in between there is an RBI event. If something comes from there, it will definitely help. But the way the consolidation or positions are placed, I still feel that one should go long. For November series keep a stop loss of 5550 and for current series keep 5630 cash level as the stop loss level. Q: Axis Bank had a really strong run up since the beginning of September. Do you have a buy call there?
A: Yes. I have two conclusions in it. First is that the Bank Nifty has seen a better rollover already than all other indices, clearly telling you that if this rally has to be continued. It has to be taken by the banks going forward in November series. Similarly Axis bank has also shown good rollovers. Already 39 percent positions have rolled vis-à-vis, if you compare with its six month average it is 32 percent.
The rollover cost is very encouraging clearly telling that a lot of long positions have been rolled.  Till it is above Rs 1,160 there is a specific stop loss level that traders can keep. It has the ability to go and retest back Rs 1,260-1,270 zone. So, Bank Nifty will do good, but among all the banking stocks Axis Bank can outperform. Now no major surprises can hit the stock, so the stock is very positive.
_PAGEBREAK_ Q: You have got a bearish call on IOB. Do you think the Bank Nifty might lead the fall in the Nifty that you foresee?
A: Basically, I am positive on Bank Nifty, so I don't think this correlates with my view. Positivity comes from the way the rollovers are going forward. So, I would be slightly bullish on Bank Nifty rather than being bearish. Q: What about rollovers in the next series? What sense are you getting from the October series? Are people waiting for the RBI policy to create big positions in November? Which way the trend might be headed for the next series?
A: If you check the options position, the trend still remains positive, because the base of put writers is shifting north. So you have the highest positions at 5500 and 5600 put. This clearly suggests that 5550-5630 should act as a strong support even in the November series. The rollovers have been more on selective basis. People have been choosing stock specific.
Banking has seen the maximum rollovers. There have been more rollovers in the private bank like Axis Bank, or ICICI Bank. So clearly, people are also choosing stocks within the sector. Surprisingly, auto has also shown good rollovers already picking up. Stocks like Hero Motors which have not seen good rollovers from past 2-3 months, means two wheelers have started seeing some buying coming back in.
Even stock like Tata Motors has seen good rollovers. So, auto and banking has seen one of the better rollovers. Still struggling on this front would be cement which has not seen previous amount of rollovers. But definitely auto and banking must be watched going forward in November series also.