Short banks on every rise, says Atul Badkar

Atul Badkar, VP - Institutional Equities - Derivatives Desk at Edelweiss Securities told CNBC-TV18, "From the shorting side at this point of time, one that comes to my mind immediately would be Tata Global Beverage and Mahindra and Mahindra (M&M), this is looking at very short-term charts in the OI built up. It looks like I would not say short immediately on open because I think we will open slilghtly stronger today, just wait and see how the second half pans out. I think at every rise, M&M and Tata Global Beverage looks like you can easily get a 5-8 percent downside here.”

He further added, “Banks is another sector where you can continue to short at higher levels. Both private and public – sometimes you do feel that the public sector banks have already been beaten down so much but how much lower can you go? We said that even close to a month ago and the cheap seems to be getting only cheaper. So among the private banks space, ICICI Bank or Axis Bank are again looking weak on charts. State Bank of India (SBI) in the public bank space is looking weak. So at every rise you can continue shorting these banks but that is not a compulsive trade. You need to watch how the next few days sort of pan out.”

“I don’t think there are too many events immediately that are going to guide the direction of the market. We have had a heavy sell-off in the last three-four trading sessions. The market breadth has been extremely negative. You may not want to just rush in to a short trade. If you will observe the OI on index options, the 6,000 Call and the 5,700 Put is where the highest OI is. Yesterday surprisingly we saw close to a million shares added on the 5,300 Put. So that is some extreme protection buying.”

“My sense is you just have to wait and watch, don’t take any immediate shorts because we have seen in the past, any trigger and all the shorts get covered very fast but banks primarily autos basically a lot of rate sensitive can continue to be shorted at every rise.”