Below Rs 195, PFC may hit Rs 185, says Amit Gupta

Below Rs 195 Power Finance Corporation (PFC) may remain under pressure and may hit Rs 185, says Amit Gupta, Head- Derivatives, ICICI Direct.

Gupta told CNBC-TV18, "If you look at the total open interest in the stocks, still more than 60% of open interest is left in certain stocks. Out of this if I start picking up, I can pick up three stocks one is PFC, the other is ABB and the third is Zee Limited. PFC and ABB are the possible candidates for some selling today because forward arbitrage positions were formed in these stocks, they were trading more than 80 bps of premium, the futures were trading at a premium vis-à-vis the spot consistently more than 80 bps. So, I think forward arbitrage positions were formed in these stocks and where the arbitragers would have gone long in cash and they shorted in futures."
"When they do this on the expiry the rollovers are not happening now and the open interest is also quite hefty, the rollover is only 35%. So it gives me a sense that the arbitragers possibly are not rolling the positions despite the favorable roll cost which is positive and the future positions are in the short side. So if they are not rolling the positions it may lead to some kind of selling today in both of these stocks."
"PFC has breached the trend line which it was following from the month of June. Below Rs 195 the stock may remain under pressure and it may hit Rs 185 also. ABB has remained under pressure around Rs 770-780 kind of levels. It is slowly giving up; it may come down to Rs 730-735 also."
"On the contrary Zee Entertainment Enterprises may witness some short covering because more than 60% of the open interest is left in this stock also. If you look at the move in the underlying, it is moved from Rs 163 to Rs 205 and still it is trading more than 16% of returns around Rs 192-191 kind of levels."
"I feel the shorts have clearly stuck up, the rollovers are very low in this stock also, it is only 38% rolls, so it gives me a sense that the shorts are little unwilling to roll the positions to the next series and there maybe a possibility of another round of short covering in the stock today. The decline towards Rs 187 which is a good support can be utilized to go long for a target of 198-199."