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Epic Research
After yesterday's fall, the Indian market has started on a weak note today. In an interview to CNBC-TV18, Amit Gupta of ICICI Direct says 5,530 would act as a good support area. "We should start buying from there. Utilise these declines to go long in the market. Eventually, you may go back to 5,680 kinds of levels," he adds.
Also read: Nifty has support at 5550-5585, says Anil Manghnani
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.
Q: How do you see the rest of the series panning out now?
A: My sense is it is still going to be a sideways market. I am not seeing any major trigger coming up, after yesterday’s event. If you look at the volume weighted average price of the last series, which was at 5,730 and despite all positives, initially our market was not able to take out that level convincingly.
We had an opinion, at the starting of the current series, we can go stock specific, but not in the PSU banking where the open interest positions are quite steep. The stocks, which have open interest, had risen very sharply from Rs 180 crore to almost Rs 210 crore before the last expiry. Most of the positions were getting rolled into the current series. We had an opinion some long liquidation may start happening in the PSU banking. That has emerged.
In Nifty, we still have an opinion that the move towards 5,530 would act as a good support area. We should start buying from there. The reason is that 5,600 Put has remained the highest put base in the last two series including this one. In this series, around Rs 70 was the premium. Hence, I think trader were under no problem, if it goes to 5,530. Beyond that, there maybe some panic coming up. So, utilise this level, utilise these declines to go long in the market. Eventually, you may go back to 5,680 kinds of levels.
Volume weighted average price of the last serie, which was at 5,730, has come down to 5,680 now. So, my sense is once we see a bounce from 5,530, it may go till 5,680. The range of 5,630 to 5,730 may come down to this particular range of 5,530 to 5,680 eventually for another week or so.
Q: Why do you like Idea ?
A: If we look at telecom, in the last couple of weeks, some buying is emerging. When they see fall of one-two percent, immediately the stocks are bouncing, irrespective of what is happening to the market. If you look at the last session, the index was dipping down, but these stocks were showing some sort of resilience.
Idea, at Rs 80, has created a very good base in the month of September and then October. The stock had fallen from Rs 88 to 80 and then finally took this base. The best part for the stock is that the leverage is very low. If you look at the total open interest right now in Idea, it is 11 percent lower than the last series. That gives me a sense that there maybe some fresh buying emerging in the stock at this levels. It can go up to Rs 88-89 kind of levels. Keep your stop loss at Rs 78 and just wait for one rupee of dip, around Rs 82-83, you can initiate your long positions.
Q: Would you recommend anything in the pharmaceutical space?
A: If you look at the last one month period, slowly we saw that the positions were getting closed in Cipla and Biocon . We saw around 8-10 percent of long liquidation in both of these stocks.
If you look at Dr. Reddy’s , it has been moving more in 100 points of range from Rs 1,600-1,700 or Rs 1,750 kind of levels. This could be one stock that one can buy and keep in portfolio because every now and then I am seeing signs of good amount of short covering, whenever the stock falls by four-five percent. It is eventually forming a good base before finally moving out further. So, out of the whole lot, this is one stock that I will pick. I will continue to hold for coming months.
Also read: Nifty has support at 5550-5585, says Anil Manghnani
Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Sonia Shenoy.
Q: How do you see the rest of the series panning out now?
A: My sense is it is still going to be a sideways market. I am not seeing any major trigger coming up, after yesterday’s event. If you look at the volume weighted average price of the last series, which was at 5,730 and despite all positives, initially our market was not able to take out that level convincingly.
We had an opinion, at the starting of the current series, we can go stock specific, but not in the PSU banking where the open interest positions are quite steep. The stocks, which have open interest, had risen very sharply from Rs 180 crore to almost Rs 210 crore before the last expiry. Most of the positions were getting rolled into the current series. We had an opinion some long liquidation may start happening in the PSU banking. That has emerged.
In Nifty, we still have an opinion that the move towards 5,530 would act as a good support area. We should start buying from there. The reason is that 5,600 Put has remained the highest put base in the last two series including this one. In this series, around Rs 70 was the premium. Hence, I think trader were under no problem, if it goes to 5,530. Beyond that, there maybe some panic coming up. So, utilise this level, utilise these declines to go long in the market. Eventually, you may go back to 5,680 kinds of levels.
Volume weighted average price of the last serie, which was at 5,730, has come down to 5,680 now. So, my sense is once we see a bounce from 5,530, it may go till 5,680. The range of 5,630 to 5,730 may come down to this particular range of 5,530 to 5,680 eventually for another week or so.
Q: Why do you like Idea ?
A: If we look at telecom, in the last couple of weeks, some buying is emerging. When they see fall of one-two percent, immediately the stocks are bouncing, irrespective of what is happening to the market. If you look at the last session, the index was dipping down, but these stocks were showing some sort of resilience.
Idea, at Rs 80, has created a very good base in the month of September and then October. The stock had fallen from Rs 88 to 80 and then finally took this base. The best part for the stock is that the leverage is very low. If you look at the total open interest right now in Idea, it is 11 percent lower than the last series. That gives me a sense that there maybe some fresh buying emerging in the stock at this levels. It can go up to Rs 88-89 kind of levels. Keep your stop loss at Rs 78 and just wait for one rupee of dip, around Rs 82-83, you can initiate your long positions.
Q: Would you recommend anything in the pharmaceutical space?
A: If you look at the last one month period, slowly we saw that the positions were getting closed in Cipla and Biocon . We saw around 8-10 percent of long liquidation in both of these stocks.
If you look at Dr. Reddy’s , it has been moving more in 100 points of range from Rs 1,600-1,700 or Rs 1,750 kind of levels. This could be one stock that one can buy and keep in portfolio because every now and then I am seeing signs of good amount of short covering, whenever the stock falls by four-five percent. It is eventually forming a good base before finally moving out further. So, out of the whole lot, this is one stock that I will pick. I will continue to hold for coming months.