Nifty at 21,000 by next Dec, rupee to remain rangebound, says options trader PR Sundar

PR Sundar (Illustration: Suneesh Kalarickal)

PR Sundar, who is an options trader and trainer, is also the owner of a Mercedes Benz S Class and a four-storeyed penthouse worth Rs 30 crore in Tamil Nadu. He is now shopping for a Rolls Royce too. In his latest Twitter post, he can be spotted posing next to the Ghost model. He aspires to buy a yacht in 2024.

“If I tell anyone that superstars from the South are my neighbours, they think I am showing off. If I film a video of my house, they think I am showing off. I am simply putting out my big achievements so that it becomes an inspiration for traders,” said Sundar in an exclusive interview with Moneycontrol.

His journey from a maths teacher to an options trader has been extraordinary. He completed his post-graduation in Chennai, took up a job as maths teacher in a Gujarat school, got an opportunity to teach in Singapore, and is now finally setting up a base in Dubai. Edited excerpts from his interview, where he talks about markets and more:

What is your current market outlook? Do you have any near-term and one-year targets for the Nifty?

India has managed to outperform globally this year. The fact that the Indian rupee has significantly depreciated only against the US dollar, and not against other currencies, shows its strength. Foreign institutional investors have also turned buyers in November. So I am expecting the all-time Nifty high of 18,604 to be taken out at least by the end of December. My Nifty target is 19,000 by the end of the year.

Let me give you the tale of two countries. Just before the Lehman Brothers collapse in 2008, Nifty was just above 6,000. China’s Shanghai Composite was also around 6,000. When the global financial crisis hit, both India and China fell 50 percent and went below 3,000. Almost 15 years later, we have shot up six times from 3,000 to 18,000. But what China lost in 2008, they have still not managed to recover. The Shanghai Composite is still struggling around 3,000-4,000.

So, from a longer-term perspective, I have never been more bullish on India. With India awaiting inclusion in the global bond index, chances are that the Nifty will touch 20,500-21,000 by December 2023.

In a recent video, you used the clickbait title Nifty at 35,000 by December 2023. Can you elaborate on why the charts are indicating that?

I was interacting with some people who are overly bullish on Indian markets. Their hypothesis is: After the Lehman Brothers collapse, Nifty shot up more than 100 percent in the next one year, from 2,500 to 6,200 by end of 2010. In the same way, the coronavirus scare caused the markets to fall to 7,511 in March 2020, but this was followed by Nifty shooting up more than 100 percent to 18,000-plus in the next one year.

In the same way, people are thinking that the fall caused by the Ukraine-Russia war and inflation crisis will propel markets more than 100 percent higher. That means, from 17,500 to 35,000 by the end of December 2023.

But that theory is entirely wrong. In the previous instances, the world was witnessing quantitative easing, but now we are seeing quantitative tightening. The scenario is completely different. So you cannot extrapolate what happened in 2008 and 2020 to 2022.

Since you talked about the Indian rupee, do you have any level in mind?

If you go back to 2013, during the taper tantrum, our currency depreciated swiftly from Rs 60 to Rs 69 against the dollar. Following that, for the next seven or eight years, our currency remained strong. In the same way, our currency has now depreciated swiftly from Rs 71 to Rs 83. In that sense, I'm now expecting it to remain stable for the next few years.

I do not want to speculate for the very short term, but in the long run, I can see a stable rupee in the 80-85 range at least for another four or five years. Not beyond 85.

In a 2018 interview with Moneycontrol, you said 95 percent of your trade was in Nifty and Nifty Bank. But from your Twitter handle, it is clear that you have taken positions in Adani Enterprises, BHEL and State Bank of India. Has your strategy changed in the last four years?

No, my strategy hasn’t changed. My capital has grown. In 2018, my capital was maybe Rs 2-3 crore, but now it is about Rs 50-60 crore. So whatever positions I am taking in stocks, it is still 5-10 percent of my portfolio only.

What are your views on current Securities and Exchange Board of India regulations? Good, bad, ugly? Do you have any suggestions?

I have plenty of suggestions in mind. When we take a position in futures and options, we pay two types of margins. One is called SPAN margin and the other one is called exposure margin. Worldwide, there is only the SPAN margin, there is no exposure margin.

Let me give you another common issue that traders face. In the US, suppose I have 100 shares of Apple. When I sell a call option, which is popularly called a ‘covered call’, I carry zero risk. That’s because if the price goes against my trade, I have the shares in my account to give delivery. In India, suppose I have 500 shares of Reliance Industries. If I sell a call option, that means zero risk. But I still have to pay SPAN margin and exposure margin.

Margins are collected to cover risk. What’s the point of an exchange collecting margin money when the risk is zero?

I understand that SEBI’s strict regulations are to stop rampant speculation in the markets. But it might end up like the ‘cobra effect’ in Delhi.

During the British era, concerned over the increasing number of cobras in Delhi, the then government offered a reward for every dead cobra. This strategy worked initially, but slowly people began to breed cobras in their homes just to receive the reward.

Your advice to retail investors...

My famous quotation: If you're trading futures, you have no future. If you trade in options, you have plenty of options.

And, don’t take undue risks. Take calculated risks only.

(This interview has been edited for length and clarity.)

(Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.)