Don't see Nifty breaking 5200 in Sept: Aditya Birla Money

The August futures and options contracts will expire today. In an interview to CNBC-TV18, Hemant Thukral of Aditya Birla Money says people are going into September series with a very cautious mindset.

"The way rollovers have behaved and positions are being transferred to September series, suggests that people are going ahead with a very cautious mindset. Stock futures positions have come down rather than going up. People have booked profit," he elaborated However, he doesn’t see the Nifty breaking the 5,160-5,200 range in September. He suggests going long on the Nifty as it starts heading towards 5,250-5,260 levels. Below is the edited transcript of Thukral’s interview with CNBC-TV18. Q: What kind of positions would you take on the index today ahead of expiry? A: The way rollovers have behaved and positions are being transferred to September series, suggests that people are going ahead with a very cautious mindset. People have trimmed down lot of positions because stock futures positions have come down rather than going up. So, people have booked profit and have not carried on long positions. The momentum is missing at higher levels. Now at 5,200 levels in September, highest Put writers are standing very similar to 5,000 when we started the August series. I do not see that this lower end of the range 5,160 to 5,200 will be broken in September. The more you approach towards 5,200 due to profit taking, risk reward turns in your favour to go long on Nifty. I would be betting if Nifty opens with a gap down cash levels around 5,260-5,250 today. It is a good level to trade longs because the risk rewards is in favour, keep a stop loss of 5,180 then the rally will resume towards 5,400 zone. This is because maximum positions will be going out of the system till today, shorts were covered in between the contract and longs have been unwinding by the end of the contract. We will be again going to the next series with very light positions. That is not such a bad situation as people are thinking. I would be going long if it approaches around 5,250-5,260 levels. Q: Any concerns on the way the Bank Nifty has started underperforming the Nifty? A: That has always been the main concern because the rally has been started by Bank Nifty and they consolidate when Bank Nifty has that outperformance to continue. My main concern is not the PSU Bank lot, which was always weak.  In fact, PSU banks have come to a level where you might see some short covering coming in, in them. I am more worried about private banks and the way ICICI Bank, HDFC Bank, Axis Bank rollovers are happening. Rollovers in them are well below average and this suggests that people have opted to book profits rather than carrying their long positions. I would be watching closely how these three private banks add positions when they enter September series because they will be entering with very lower positions than usually what is being rolled. If Bank Nifty breaks 10,000 then it will approach 200 day moving average (DMA) of 9,800. This level should be held by Bank Nifty and it is the most crucial level to watch for Bank Nifty. Q: Wipro has had a good run in the past one month from Rs 330 to Rs 360. You see more there? A: I have selected Wipro because IT as a sector is showing good rollovers; both TCS and Infosys are showing rollovers with an improved cost, obviously TCS is looking the best bet currently. But Wipro has seen a surprise jump in rollovers this time. Rollovers have already crossed 67%whereas six months average is only 51. The rollover cost is very positive. So once Wipro crosses that and stabilizes above Rs 365, we are looking at a target of Rs 390 on it. Traders should keep a tight stop loss of around Rs 335-340 where it has formed a strong support base now. I would be going long in Wipro for the September series. Q: Are you expecting some surprising moves around expiry? A: Even if I am expecting I would be expecting on the positive side rather than negative. The reason is because lots of positions have been already unwounded, so I do not see much pressure. In fact, the pressure would be coming on pharmaceuticals and FMCG where still long positions are being held up, but they do not fall much. I am expecting some short covering in the Bank Nifty especially the PSU banks and metals where lot of shorts are still outstanding. If I would be doing a trade for the day I would try buying at the bottom and look back that Nifty can reach at least 5,300-5,310 on the higher side.