Buy Divi's Labs & Godrej Industries: Manoj Murlidharan

In an interview to CNBC-TV18, Manoj Murlidharan of Religare Securities shared his readings and outlook on Futures and Options (F&O) side of the market, specific stocks and sectors.He recommends buying LIC Housing Finance, Divi's Laboratories and Godrej Industries.Below is the verbatim transcript of Manoj Murlidharan's interview to Latha Venkatesh & Anuj Singhal on CNBC-TV18.Latha: The Nifty trade today and where might the Nifty close this July contract?A: Expiries are not easy and because we have events -- the data is all mixed up. The Nifty futures the rollovers has almost been done. If you see what we started with the last contract, we are almost at the same in terms of open interest (OI) around 1.8 crore. The interesting part is Bank Nifty has got around 6 lakhs, which is yet to be rolled, if you had to match what we started this contract with.So, ideally the good part with the Nifty is July contract is opening still with an 1.8 crore of OI -- I don’t know what they are going to do in this six hours, if they square it off then obviously we have a swing of around 122 points on Nifty and if they decide to roll it on to August then obviously we have a 90 point odd. So, I guess the best strategy here is to go long on volatility Index. You buy an 8,600 Call and Put option, I guess yesterday’s close is around Rs 60, but eventually you will get a close to Rs 30-35 in that, possibly one or two hours after trade, that is the time you buy that. Keep a stop loss of Rs 10 and quite optimistically you can get something positive then Rs 70-90. So, the swing can be 120 point odd. I am expecting a volume weighted average price (VWAP) short covering coming from the banks. Intraday, we might be grinding on the downside, the expiry can be closer to or plus 30 from the 8,600 mark we are right now.Anuj: What about the individual stocks any VWAP related stock that you would buy or sell?A: We are looking in to couple of stocks but then I guess the VWAP would play more towards the 2.30 factor and I guess it would be more from the banking pack. Interestingly, yesterday foreign institutional investors (FIIs) has bought Index option, I guess around Rs 1,100 crore odd, so I guess there is volatility which we might see possibly after the Europe open.However, stock specifically we have looked into cash based buying, so we like LIC Housing Finance. We will go with the August future at Rs 517 with a stop loss at Rs 508. We are expecting a target of Rs 530 on that.Secondly, Godrej Industries is one stock we like. There is good accumulation happening so we recommend buying there at Rs 430 with a stop loss of Rs 423. We are expecting a target of Rs 445 on that.We have a buy on Divi's Laboratories as well as Rs 1,190 with a stop loss at Rs 1,170 and we are expecting a target of Rs 1,225 on that.Latha: Any of the other strategies?A: We can get into a couple of trades here, Asian Paints -- I would rather say it would be into a profit booking mode because on we feel Rs 1,090 to 1,100 is a stiff resistance so we would say we can sell a Call or start shorting it at that point with a stop loss of Rs 1,120 and we are expecting a target of Rs 1,036 on that.Dr Reddy Laboratories (DRL) is also a sell somewhere close to Rs 3,000-3,020. We would recommend selling that stock. It is rather an exit with a stop loss of Rs 3,080 because the base or the VWAP accumulation is as low as Rs 2,830 so somewhere close to Rs 130-170 more point on downside.Reliance Communication would be a buy. We would recommend buying it at Rs 52.7 stop loss at Rs 51 and expecting a target of Rs 54.60 possible today also.