Buy Canara Bank 480 call: VK Sharma

Buy Canara Bank 480 call at around Rs 15, says VK Sharma, HDFC Securities.

Sharma told CNBC-TV18, "We have looked at SBI first and the larger caps ICICI Bank in the private sector and even IDFC. I think it is also time to look at the slightly smaller companies. In PSUs we like Canara Bank largely from the fact that if for any reason the RBI does take heed of whatever the international rating agencies are saying and also although belated but it looks at what the FM was saying and it really cuts. then this is the company which could benefit because of whatever the government portfolio that it is holding."
He further added, "The appreciation there could be of a much higher order than what is generally expected as compared to other PSU banks. So I am suggesting buying the 480 call at around Rs 15 keeping a stop loss of Rs 10 and hoping to make Rs 15 on this in terms of selling the call at Rs 25 in current series itself.
"In IFCI you cannot find a fundamental reason, so therefore if you were to look at the kind of positions that have been built and the way the stock is technically behaving I think one of the best ways is to do a bull spread in this. So I am suggesting buying the 35 call at around Rs 1.6 and selling the 37.50 call at around Rs 1. So your cost comes to just 60 paise and the maximum profit that you can have is Rs 1.9. So the cost-to-benefit ratio is 1:3 which is very favourable. So those punters who want to really look at IFCI I think doing a bull spread would definitely be done at a lower kind of risk and higher profits."