Nifty bullish, series may expire at 5350-5400: MF Global

The Nifty has broken 5370, an important technical level, and the prevailing low volatility and a build-up in open interest suggests there is bullishness in markets.

Vineet Bhatnagar of MF Global told CNBC-TV18 that the option data shows Nifty in the 5000-5500 range, with highest open interest build-up at 5000 levels. Bhatnagar advices trade on the long side and predicts Nifty expiry around 5350 or 5400 levels. Below is a verbatim transcript of Vineet Bhatnagar's interview on CNBC-TV18. Also watch the accompanying video: Q: How does Nifty Futures look to you? The spot market is indicating that an important technical resistance at 5370 has been broken. So would you play With caution or would you go long on futures? A: Actually there is some level of underlying bullishness as we see in terms options built-up for the Nifty is appearing as of now. There is a build up at 5,500 and technically there is a resistance that comes at 5,450. You must have noticed that the current few weeks have been characterized with very low volatility in the market and one of the contrarian indicators that we track is still not indicating that there could be a topping out of the Nifty as such. So the trade that we would actually quote will be on the long side of Nifty. Q: Which way do you see this series shape up now? Where do you see expiry this time around? A: It’s a bit too early to start looking at what could be the optimum expiration for Nifty, because there are still about 10 days to go. However, the way this particular month has panned out where Nifty has inched up from one resistance to another and there has been a cool off where sideways consolidation has happened and it has taken next step forward. This all is indicative of the fact that the one way runaway move that people were expecting and which results in a sharp topping out or a sharp bottom to be formed is not what we will be witnessing this time around. Therefore, it is quite possible that Nifty moves to about 5450, hovers around that and as we have approached the expiration time it will be 5350 or 5400. Q: What would be your conviction longs in the Nifty itself? There is no taking away from the fact while there is caution at higher levels the Nifty has broken the resistance level of 5,370. Would your conviction lie with the PSU banking stocks? Would it lie with Reliance? What could be relatively more convincing than the Nifty if at all? A: We are seeing strength in both the sectors that you have indicated, banking sector overall. We are seeing some names in that space that would perhaps carry forward the strength that we have seen. _PAGEBREAK_ Q: Give us some names in terms of individual stocks that you would bet on at this level. A: Reliance still looks appropriate for a long side of the trade from the time that it shot through the 200 day moving average, which was acting as a strong resistance. The stock has continued to do well. As far as the banks are concerned, ICICI Bank still looks alright in terms of the long side. Bank of Baroda, Vijaya Bank, IndusInd Bank and Indian Bank have also started popping up their heads in terms of long positions and momentum that we could see in them. Q: What about the IT stocks, is there any trade over there say for instance in Infosys, which after a long cut is beginning to show strength? A: No, IT is a sector pretty much like realty has been muted. Realty is comparatively little weakish. IT is definitely not showing any trend, which could prompt us to recommend any long side positions right now. Q: Do you think that there is a greater degree of comfort at this level that even if we are range-bound for the next couple of months, the downside for this market would be limited? A: On of the things that we talked about earlier was the very low volatility environment in which the market has been trading. One of the other things that we have noticed in terms of the Nifty option build up on the downside is a strike price of 5,000. We are looking at 5,500 on the upside as the distribution for the calls for Nifty, but on the downside it is as low as 5,000. There is this market consensus to look as down as 5,000. There are intermediate support levels where we are seeing some Nifty option build up at around 5,300 and 5,200, but the maximum is at 5,000. Q: Any other stocks in the mid-cap space where you have a strategy? A: No, not really. We have been focused on the movers and shakers, the leading indicators of the top 50-100 names in the market. I have not focused on the mid-caps. Q: SBI and Bharti Airtel both tanked post numbers how would you approach them now? A: If one is looking at a revival in terms of the sentiment change and perhaps topped up by some of the policymaking that everybody is expecting to come out from New Delhi, followed up by some follow-up action on the back of lower inflationary environment from the central bank then we are looking at long-only portfolio investors to take positions in a more sensible way. It is visible for the first 10-15 days of this particular series that there is an underlying net cash purchases from the institutional customers. In that kind of an environment taking positions on the long side for SBI and Bharti Airtel is recommended.