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Last Updated : Feb 26, 2015 04:10 PM IST | Source: CNBC-TV18

Calls costly now, need to form spread strategy: Bhamre

In an interview to CNBC-TV18, Siddharth Bhamre of Angel Broking shares his views on February F&O expiry and his expectations from March series ahead of the Union Budget on Saturday (February 28).


In an interview to CNBC-TV18, Siddharth Bhamre of Angel Broking shares his views on February F&O expiry and his expectations from March series ahead of the Union Budget on Saturday (February 28). 


Below is verbatim transcript of the interview:


Q: What to do in this last hour of trade?

Close

A: With the disclaimer that I am not responsible if they make losses if they listen to me today. What we are observing that market before the Railway Budget what it was and now it is back to those levels. Market did not understand what actually this Budget meant; I believe that was a good Budget with minister talking about improving the efficiency rather than doing populist announcement and it is a good Budget.


The foreign institutional investors (FIIs) have been unwinding their positions in large quantity in last one week or so. Yesterday we have seen some sort of shorting as well. We are not expecting very big run up in last half an hour as such but there are people who are stuck in various positions in market. In between 8,400-8,500 people are stuck in shorts, at 9,000 people are stuck in longs.


From today’s trading session perspective I feel that there might be some bounce back which is left in market though it is going slightly down now. We might end around 8,750-8,770 odd levels so today morning we had this opinion that if we go to 8,720 we will buy 8,750 Call options. That we did but we suffered mark to market losses and after the Budget when market misunderstood it we went long in Nifty future around 8,675-8,680 odd levels and we are holding those long positions. So I feel there is still scope of further bounce back in market in today’s trading session and we might close around 8,750-8,770 odd levels.


Q: In terms of individual stocks, which stocks can take Nifty towards the 8,750 mark?


A: Bank Nifty today is not underperforming and ICICI Bank and Axis Bank have seen good amount of rollovers. It is more of a guess work which I am doing right now that these banking stocks especially private sector banks like HDFC and HDFC Bank may show good bounce back in last 45 minutes to half and hour whatever is left in this market and try to take market higher.


Q: A quick take on a couple of stocks for instance outside of the financial space like IT or FMCG that have had a good series and whether you expect these gains to continue in the series to come?


A: Wipro remains buy on dips for us. We are shorting Infosys at higher levels. In FMCG I am a bit skeptical of ITC above Rs 400 levels. I am not so very bullish on HUL.


Q: The next series starts with Union Budget on Saturday. What is a good strategy now for this binary event?


A: If we correct say more 100 points tomorrow then a good strategy would be doing a bull call spread in Nifty. If we are up tomorrow or say before Budget 100-150 points then shorting 8500 Put and 9100 Call would be a good strategy. So, it depends how you are starting the Budget.


Q: Could you give the strike prices for the bull call spread?

A: Suppose if market goes to 8650-8630 tomorrow then 8700 and 8900 or 9000 you can use because implied volatilities (IVs) are high. So, calls are expensive right now. So, you need to form a spread strategy rather than just buying Call Options.

First Published on Feb 26, 2015 04:10 pm
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