For Nischal Maheshwari of Edelweiss Securities it is still a buy on dips market. According to him, the cautionary stance still remains as there hasn't been any more clarity than a few weeks ago. Nifty has been rangebound for sometime now - 5,950 on the lower side and 6,150 on the higher side.
Siddharth Bhamre of Angel Broking on the other hand believes investors or market participants have become very complacent with the idea that the market is going to remain rangebound atleast for now. But he sees an upward breakout from 6,150 level to breach 6,200 level.
Maheshwari is bullish on Axis Bank and ICICI Bank. He says banks like IndusInd Bank and Yes Bank can also be bought at dips in the market. However, he maintains a cautionary position because the outlook on the banking sector remains cautious. He believes one can keep accumulating capital goods stocks like Voltas and Larsen and Toubro. In the mid-cap IT space, he likes Persistent Systems, Mindtree and Hexaware Technologies.
Bhamre advises investors to go long on HDIL at current prices. He also sees Bharti Airtel going down to Rs 285-280 levels, and tells investors to cover short positions there. He believes Reliance Industries has the potential to back to Rs 840-845 level.
Below is the verbatim transcript of Nischal Maheshwari & Siddharth Bhamre's interview with Sonia Shenoy and Reema Tendulkar on CNBC-TV18.
Sonia: How are you approaching the market now and is this still a buy on dips market in your mind?
Maheshwari: I think it’s still a buy on dips only. I do not think there is much more clarity than a couple of weeks back, so the cautionary stance still remains.
Reema: So far the Nifty has been in a tight range but are you getting signs that over the last few days there has been some momentum on the positive side and Nifty might breakout on the upside. What would the call be on the Nifty and the trading strategy?
Bhamre: Last two weeks we have been mentioning that this market is in a range of 5,950 on the lower side and 6,150 on the higher side and 200 points on an index which is 6,000 plus is not a very big range. Very important observation is on what happened on Thursday; Thursday market hit around 6,150 level spot and it came down 60-70 odd points despite that implied volatility has significantly corrected. How we read that. We read it in this way that this market and the participants are becoming quite complacent in terms of that this market is a range bound market and this market is not going anywhere probably till February expiry – that is what people are trying to put in forms of options trades and that is what is reflected in implied volatility.
If we look at Nifty and especially the weekly chart; it is closed on a high point of the day. You also mentioned about how foreign institutional investors (FIIs) have started buying in the last five-six trading sessions though their are buying is not so much visible in Futures and Options (F&O) segment but cash market – they were sellers a couple of week back and they have been buying now. So, all these factors clubbed together I believe that this complacency of participants would go heavy on them and we are sensing an upward breakout from here. When we say upward breakout, we are not talking about new highs immediately but we are certainly talking about market breaching 6,200 levels and going up.
How do we play on this? Look at the implied volatility (IV); today February IV were around 12 percent, March IV were around 13.5-14 percent, so implied volatility has substantially reduced. We would suggest buying 6,200 Call option and trade with positive bias for this market for the coming week.
Sonia: Do you think that one should stay invested or increase positions in the market now expecting a big rally post elections?
Maheshwari: We had a conference a couple of weeks back and the clients were both domestic and foreign institutional investors (FIIs). We are seeing a lot of interest coming back in India unlike the last two years, there is a lot of interest but are they positioned themselves. I think most of these people are now positioned around neutral basis in India.
Post the election it totally depends upon what kind of government gets formed and with what number. So, if there is a possibility of National Democratic Party (NDA) getting to form the government then the second step would come is what kind of numbers NDA will get out of the 272 and that is what is going to drive the market and not a stable government alone because we had a stable government for the last five years; United Progressive Alliance (UPA) I & II were stable. So, it all depends upon who is going to form the government and then with what kind of majority. Therefore, those things are going to drive the market.
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