On crucial November series expiry, Siddharth Bhamre of Angel Broking doesn’t expect too much volatility. He is shorting Nifty at current levels for a 4-5 percent downside and advises investors to sell on every rise.
"Premise is we are saying that FIIs position is lesser than the domestic positions and most of the positions are long," he explains. Throughout the series, FIIs have been long, he adds. He doesn’t feel FIIs are likely to rollover significant chunks of their positions today, which may lead to them wanting the market to close at higher levels.
He believes it is possible that closing may happen around 8500-8510 level. Considering that most people were expecting huge volatility and have bought 8450 put options, Bhamre doesn’t see Nifty moving below 8450 in the last 30 minutes or so.
If rollovers of FIIs are above 70 percent, then it may be a good idea to move out of short positions.
Moving on to the upcoming December series, he will probably buy puts as well as sell futures. He has done some shorting of December futures at 8550-8570 odd levels. He explains that even though there is highest built up in 8000 put, 8400, 8300 put option of the December series are also seeing good amount of writing. Such traders will most likely have to square off their positions once the market starts falling. Hence, it may be a good idea to do some shorting. He adds that put IVs are very less and if the market correct, investors can gain both ways.
At the moment, there is long positions in banking stocks. If the Nifty corrects 200-300 points, he expects Bank Nifty to correct by an equal amount. Banking bellwethers such as ICICI Bank and Axis Bank are seeing some weakness and there are good amount of long positions and rollovers too were average. Hence he is bearish on Bank Nifty.
Among PSU banks, Bhamre says large banks such as State Bank of India, Punjab National Bank are not seeing much weakness, but in mid-cap banks space - Oriental Bank, Andhra Bank or Allahabad Bank, rollovers have been limited. Hence, it is possible that even these stocks may correct a bit, he adds.
He expects more correction in ICICI Bank, Axis Bank. He feels Kotak Bank and Yes Bank may also correct. However, he does not see same amount of correction in SBI and PNB. Despite all the positives, he does not want to go long in PSU banks. “If private sector space - large cap stocks - is correcting by 6-7 percent, even PSU banks would correct 3-4 percent and hence it is not advisable to go long over there despite the fact that it may outperform,” he told CNBC-TV18.
On to the global space and the OPEC meet later today, Bhamre says even if cuts in production are announced, he doesn’t see see brent crude bounce back from current levels. He believes it may be a better idea to move out of Cairn India and shift to OMCs such as IOC, HPCL.
He adds that crude oil price and stocks markets, falling bond yields and stock markets are also directly co-related to each other. Hence if crude oil falls further and bond yields fall below 8 percent level, he does not expect equity markets to continue this uptrend. So from a medium-term perspective, there may be a consolidation and before that a 4-5 percent correction.
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