Expect Nifty to close around 8200 on expiry day: Religare

In an interview to CNBC-TV18, Manoj Murlidharan of Religare Securities spoke with Sonia Shenoy & Latha Venkatesh. He shared his readings and outlook on Futures and Options (F&O) side of the market, specific stocks and sectors.Below is the verbatim transcript of Manoj Murlidharan's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: How will you play the Nifty?A: Expiry has got its own perils and a lot of data depends on what happens in the last four-five hours of trade. Any trend in the Nifty has strength if the Bank Nifty aligns in the same direction that is what we have ideally seen. Bank Nifty has got a good 7-8 lakh, which is yet to roll in and right from the levels of 18,130 in the October futures, we are seeing some shorts coming.Now the weighted average price for the Bank Nifty October is around 17,530. What we feel is there is good rollover, which has happened in the Nifty. I guess Nifty should not be shying more than 50-20 lakhs in this trading session.However, it is Bank Nifty which will have our focus. Unfortunately I am positive today. I am expecting the banks to get into a volume weighted average price (VWAP) buy mode and we are expecting that the low of Bank Nifty October might be somewhere close to 17,280 odd where I advocate buying the Bank Nifty October futures, 100 points down on a stop loss and we are expecting the close to be 17,520.If it is on the Nifty, the strategy is simple, you buy on 8,150 Call option at Rs 40 and you sell two 8,200 Call options at Rs 18 each so the net spread is just Rs 4 and you tend to get 10 times that, the profit is Rs 40. So I have been expecting the expiry to be somewhere close to 8,180 or closer to 8,200 and I feel somewhere close to 8,120 would be the low for today's trade.Latha: Take us through your strategy on ITC, you have a buy there?A: We feel Bank Nifty would not be outperforming at least in the short-term. We are expecting the IT space and the fast moving consumer goods (FMCG) index -- so we have got a couple of stocks in the IT and the FMCG which qualify in the VWAP as well. So ITC strictly for an intraday trade, we like the stock, we advocate buying that at Rs 353 with a stop loss of Rs 345 and we are expecting a target of close to Rs 368 in the first, second or third trading session of November contract.Latha: How would you trade Larsen and Toubro (L&t)?A: In the capital goods segment we are looking at this stock and there is good delivery base distribution and there is fresh shorting. So we are expecting that the target for November would be somewhere close to Rs 1,426 but today is expiry day. So as I said, today a lot of data manipulates itself. So L&T is a sell as well. Somewhere close to Rs 1,505 on the October futures, if we get that that is where we advocate selling, stop loss should be Rs 1,520 and Rs 1,464 should be the target that I am expecting. So I am expecting at least 3-5 percent or possible of 4 percent negative close on L&T, possible today. We might see it somewhere close to about Rs 1,426 in the first week of November.Latha: Would you also have strategies in Tech Mahindra and in Hexaware? Both are buy calls?A: Last expiry was 7,846 and it was Bank Nifty which had rallied and we had seen the Nifty come up to almost 8,300 level. Now, the broader range that we are expecting the Nifty to be in November is somewhere close to around 8,060 on the downside and maybe an 8,340 to 8,400 on the upside.I feel auto as an index has outperformed. 8,360 on the auto index is where we feel the resistance is but then it is IT which is showing good 7-8 percent move which can happen in the immediate short-term maybe a fortnight or 20 trading sessions. So we are picking up two stocks, Tech Mahindra tops the list. If I go with IT index, Rs 11,580 is what it is trading at and we are expecting a good move, Rs 12,260 on the index. So Tech Mahindra is a buy at somewhere close to Rs 546, going to the November contract -- one can buy November future, keep a stop loss of Rs 532 and we have a final target of Rs 602 but eventually we are expecting that Tech Mahindra can go all the way to Rs 590 so that is the target we have.We still like Hexaware. Hexaware, Tech Mahindra and Wipro would top the list. I would still go with Hexaware at this point of time because these two still qualify as a VWAP buy for today's trade as well and we expect it to continue into the contract of November as well. So Hexaware is a buy at Rs 252 for the stop loss of Rs 243 and we are expecting a decent target of Rs 266 on that.Sonia: Is there a F&O strategy in any of the private sector banks, Axis, ICICI?A: If you go by the ratio, the weightage of public sector undertaking (PSUs) to private was around 2:1 but ideally this 33 percent of PSU weightage has come down to 26.2, if you take the data all the way from 2014 odd.Downside might be limited, the reason is because the net fair value of all the stocks to the distribution that happens into the cash market in terms of delivery selling, that is already done and even on the Bank Nifty we do not expect it to go below 16,700 and we have a very ambitious target of 20,480.The reason why I am saying this is Nifty and Bank Nifty has a ratio of around 2:13 and we all know that lot sizes are changing so tomorrow onwards, it would be 75 for the Nifty and it is 30 for the Bank Nifty. Ideally, the private sector banks, the weightage which has elevated to around 68 percent, we are expecting that to come down.So what I am trying to say here is that the Bank Nifty would have limited downside and once we come to this ratio of 2.08 between the Nifty and Bank Nifty, there would be a good buying. So if I have to simply answer your question, Bank Nifty is certainly buy on dips but the best bank that I feel we would be buying at least for the short-term or maybe couple of months, I would top the list with Yes Bank and HDFC Bank as of now.Latha: Can you reiterate your Nifty strategy?A: The view that I have for today is that the low for the Nifty might be somewhere close to around 8,128-8,130. So we advocate you can buy a future at that point of time with a target of 8,180 or you buy a 8,150 Call option, you should get it between Rs 28-30 and you sell two 8,200 Call option, your spread is Rs 8-10 and you will get Rs 40 in that. Now the view that I have here for the month of November is that in November we have a range of 8,050-8,400 and I guess when we come to 8,050, which we should in this month of November, the Nifty has got a good 600 points move when we end this year. So I am expecting the December to be somewhere close to 8,600. So we are positive on Nifty, it is a buy on dips from our side.