Pharma, IT may outperform in April series too: Edelweiss

Yogesh Radke, head of quantitative research at Edelweiss Securities in an interview to CNBC-TV18 said if rollovers do not pick in the first half then there could be some selling by arbitragers on back of expiry.According to him levels of 8450-8380 are crucial levels for the Nifty reversal, says RadkeWith IT and pharma still continuing to see interest, the next series too looks promising for them. However, banking has seen lower rollovers in the series, he adds.

With the spectrum auctions for telecom ending, the larger concerns seem to be over and so would keep a keen watch on Bharti Airtel and Idea Cellular, says Radke.Below is the transcript of Yogesh Radke’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.Latha: What is the sense on the Nifty itself do you think it will be above to keep above 8,450 mark? What is the finish looking like today?A: Today’s day is also clubbed with the expiry and also the yesterday’s global sell off which was there. For the expiry I would say that yesterday the rollovers were below average so if the rollovers do not take up in the first half of the market then some amount of selling could be seen from the arbitragers. On the other hand, since this is a March month where you see that the rolls get stretched till the last day and as the roll cost expands in the later half of the market you would see rollovers also picking up. So the broader thesis is that if we see rollovers picking up during the first half of the market, we may not see any major sell off from the arbitragers from the prospective of expiry. However, if rollovers do not pick up in the first half, some amount of selling could be seen in the midcap and also the frontline counters from the arbitrager on the back of the expiry.

Sonia: This series may not have been great for the markets but it was spectacular for the entire pharma sector. Names like Lupin, Sun Pharma and Cipla have all gone up about 5-20 percent in this series. Would you take any fresh positions in the following series in the pharmaceutical space and if yes what are the stocks to look at?A: Largely if you look at the derivative markets also we are seeing that still quite amount of good interest is in pharma and IT names so surely the next series also looks promising for the IT and the pharma sector. We have seen lackluster rolls in some amount of banking basically the PSU banks and all and also some amount of beta counters which have seen low rollovers majorly the midcap counters.You rightly pointed out that the momentum is good into the pharma and the IT names which are there. They may do better in the next series also.

Latha: Any bets on the Bank Nifty how do you see it going?A: Largely, Bank Nifty if you see this the composition is largely driven by the top 4-5 counters. I believe if today’s expiry session happens in a normal form say no major selling is seen then we may see the reversal in the banking sector also. Bank Nifty also may see reversals from the current levels but surely we need to monitor the 8,450 level and 8,380 levels just see the reversal of Nifty. Sonia: Another stock that has been very strong performer this series is Bharti Airtel and now it has crossed that Rs 400 psychological mark as well how do you trade that stock?A: After the telecom auction the first 2-3 days itself the clarity largely emerged and the prices also factored in the same. The final outcome will be coming out only after the Supreme Court giving their judgment on how the announcements will come out on the allocation of the spectrums. However, I believe the larger concerns over the telecom sectors are over.