Indian Financial Markets: FO cues: Nifty will test 5300-5320, says Hemant Thukral

Mon, Aug 06, 2012 at 09:59

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F&O cues: Nifty will test 5300-5320, says Hemant ThukralHemant Thukral of Aditya Birla Money is hopeful that Nifty will test the levels of 5,300 to 5,320 going ahead. He suggested that one should start booking profits once this level is reached.Share . Email . Print . A+A- Hemant Thukral, National Head-Derivative Desk, Aditya Birla Money

I would not be trading shorts straight away. Whatever longs we have initiated from 5,100 or around 5,080 mark, if it reaches, then it will be a gap up opening around 5,260 cash level.Hemant Thukral

National Head-Derivative Desk Aditya Birla Money

Hemant Thukral of Aditya Birla Money is hopeful that Nifty will test the levels of 5,300 to 5,320 going ahead. He suggested that one should start booking profits once this level is reached.

However, for Nifty breach levels of 5,400 one should see open interest being built up in largecap stocks, he said in an interview to CNBC-TV18. "As per last one week’s data the maximum run-up in largecaps is seen because of short covering. There is no fresh open interest being build-up on the long side."

Below is the edited transcript Thukral’s interview with CNBC-TV18.

Q: Do you think the Nifty can get back to 5,350 levels, are you starting longs right now or would you be looking to take profits or even initiate shorts at higher levels? What is your trading orientation?

A: I would not be trading shorts straight away. Whatever longs we have initiated from 5,100 or around 5,080 mark, if it reaches today it will be a gap up opening around 5,260 cash level. Then we will raise the stop losses to 5,190.

Nifty ultimately will reach that target of 5,300 to 5,320, but beyond that I would want some serious open interest to be build-up on long side to get a justification that Nifty can move beyond 5,400. I would start booking my profits around 5,300-5,320 mark.

I am saying about open interest is because as per last one week’s data - the first week of August series, the maximum run-up in largecaps is seen because of short covering.

There is no fresh open interest being build-up on the long side especially in a largecaps, the long buying interest is seen more in the midcap front. For me, you can reach till 5,300 but beyond that one have to see the open interest coming back in these largecaps to stretch this rally beyond that level.

Q: You have a buy on IVRCL Infra today?

A: The midcap side of every sector has seen more build-up. On Friday IVRCL has seen fresh open interest being build-up and that has come with a higher cost. This tells that somebody has started buying or accumulating the stock from lower levels. IVRCL has managed to cross Rs 45.50-46 mark, which was proving to be a slight bit of resistance for it.

In immediate short-term, I do see this stock going up back to Rs 49-49.50 levels. But traders who are going long today should keep a very strict stop loss around Rs 44 mark because that has been a basic support for IVRCL Infra. If it breaks below that, then one should cut or come out of all long positions.

Q: Which stock will you pick from the frontline metal space?

A: All have seen huge short build-ups. If one is looking for a short covering rally on upside in metals for obvious reasons because global markets has moved up, one can rank on the short-term basis the way the shorts have build-up. Tata Steel has the maximum shorts so that will move up, followed by Sesa Goa, Sterlite Industries and Jindal Steel and Power.

These four stocks have the maximum shorts, so they should see maximum rally. JSW Steel was a complete surprise for me because that has seen long positions in last one week. If one is looking for a stronger counter then it’s JSW Steel, but if one is looking for a very short-term rally, Tata Steel should be kept as the main target because there are maximum number of shorts.