Nifty to end August series in 5380-5420 range: HDFC Sec

Nifty breached crucial 5,400 levels surprising all, but VK Sharma of HDFC Securities says it won’t be able to move beyond 5,450 in the current series.

"All it can do is a close between 5,380 and 5,420 this month. But thereafter will be a function of what the government does after the session gets over," he tells CNBC-TV18. On the other hand, the downside for Nifty is capped at 5,350 levels. Below is the edited transcript of Sharma’s interview with CNBC-TV18. Q: Do you think the uptrend in the market is intact and where do you see expiry this time? A: The way positions are stacked up; people have gradually pruned their positions in the Bank Nifty. In the current series we have seen the positions being pruned to the extent of even 3.7% although it has gone up, but in terms of open interest 23% positions have been pruned and those positions have been built in the Nifty. I do not think the Nifty has any kind of a risk of closing below 5,350 levels. All it can do is a close between 5,380 and 5,420 - that’s the way the Nifty will play out this month. But thereafter will be a function of what the government does after the session gets over. People are not bearish anymore at this point of time. But for the current month, although it surprised us with 5,400 levels on the higher side, but anything beyond 5,450 doesn’t look possible in the current series. Q: Do you expect more downside in VIP Industries? A: VIP Industries is going down and people are building their positions on the short side. Even yesterday although minor positions were build to the extent of 2% but this stock did go down by 4%. I feel that one can short the stock futures at around Rs 74.50 with a stop loss at Rs 76. One can make Rs 4.5 on this and I see the stock going down to as low as Rs 70 in the current settlement. Q: Till what levels do you expect Cairn India to go now if you are holding a long position there? A:  Cairn has broken out from a level which was last set on 2nd May, so this is the highest in four months. It is also going to South Africa and this indicates that it is now going to look beyond what its erstwhile parent Cairn used to do, so that was the area of Cairn UK. To that extent, it tells that Cairn UK’s exit from the company is round the bend because they are allowing this company to go to South Africa. Although crude prices have gone down today, but the 340 Call which was available at around Rs 6 can be bought at Rs 4. On the higher side, it is possible in the next one month or so for this stock to see a level of more than 360. Q: How would you approach Reliance Industries? A: Reliance Industries has done well in the current series. Although the stock has done best amongnst largecaps and positions have also been added it should close the current settlement upwards of Rs 800. People who have written lower puts at Rs 760 or Rs 780 need not cover them.They can hold on to because those puts were suggested in terms of writing. Reliance should do well even in the next series also.