ET Now: Do you second whatever Sudip said and also, we have heavyweight Reliance coming up with their quarter results now anytime sooner, so that will also reflect on the market trajectory on Monday as far as the expectations are concerned. So, how do you look at the overall week in terms of market consolidation and today’s end and also the triggers that we might get from Reliance results?
Raj Deepak Singh: Well, after three weeks of almost a range-bound move, we have finally seemed to find a direction. But if you look from the data perspective, then first Nifty is primarily moved by the FII flows which is largely absent. And if you look at their short positions, so they are almost at their highs, peaks, what we have seen in the mid of the March series. So, as of now, the data that remains a bit negative.
And what I believe that the direction which we have seen so far that is still more or so in the consolidation only, but next two weeks that is going to be a directional one. So, what we believe is particularly from Monday onwards we should find a direction and that too a major direction.
As of now, I do not want to talk about the short covering because there is not anything which we can assume or I do not want to pre-empt that short covering move. But considering the India VIX which is significantly lower, if you look at the index options ATM prices also, they are way too low for Nifty to remain in a range bound.
So, what I believe that in the coming weeks, next two weeks particularly, heading towards the July expiry, we should see a directional move. As of now what we believe that perhaps 24,800 is likely to remain important support, but below that I would not be looking for any near-term support levels. It would be more of a sell on rise if Nifty is not able to hold 24,800.
ET Now: Let us also talk about the banking sector out here. So far as far as the PSU banks are concerned, since last few sessions we have seen a downturn but then before that we have seen a good runup in this particular space. Talking about beginning of next week or entire next week is concerned, your take on the entire PSU bank sector?
Raj Deepak Singh: See, as a sector I would be still sceptical in the banking names and if you remember or if someone has looked at the data points, then perhaps from the beginning of the series most of both private sector heavyweights and public sector heavyweights, they are having their highest call basis of this hurdle at the ATM call strike itself. In some of the banks, it was even at ITM strikes. So, going through the month altogether, none of the banking stocks were able to perform the way they should have after that rate cut driven by or the expectation from the market. What I believe that Bank Nifty may continue to underperform the rest of the market, that is on the immediate basis, and until and unless we do not see any kind of short covering, I do not think it would be prudent to go for pre-emptive buying or making long position in the banking space.
ET Now: I want to ask you about the IT sector as well. If you even compare week on week scenario, the fall would be half a percent or 1% and that is despite three to four earnings which has been disappointment. What is your outlook on IT sector, what does the chart suggest?
Raj Deepak Singh: IT as a sector has not seen that kind of short buildup what I believe while the results were a bit disappointing in nature. But in terms of overall structure, perhaps the downside seems to be limited there. They might not be able to decline that much what people are expecting. So, at current juncture what we believe that either there is going to be a consolidation or some sort of positive move even from current levels that we can expect in IT. I am not going to short IT pack.
ET Now: You mentioned about your view on the banking. But there is a clear distinction in terms of market direction PSU banks versus private banks. While PSU banks have been outperforming in past two weeks, private banks have not done that great. What is your assessment in terms of picks of in terms of private or PSU banks?
Raj Deepak Singh: See, both PSU as well as the private sector bank they are going to consolidate in the near term. On immediate basis if we have to look out for any positive momentum, if at all we have to look out, if I have given a choice and we have to pick one, then perhaps it would be the PSU banks, but private sector that might consolidate a bit more before finding a fresh up move.
ET Now: What are your stock specific picks if one wants to invest currently?
Raj Deepak Singh: Well, in terms of a stock pick, I would go for a bit defensive and considering the expected volatility in the market I would prefer the names where I believe there would be less of volatility. So, if you look at the Biocon, so for almost in a year it has tested these 400 levels five or six times but never able to surpass those. Even today it closed just tad below 400 odd levels.
What I believe that the way option writers are moving away from ATM strikes to OTM strikes, at the same time we have seen a long build up in the stock open interest, so perhaps there is a further room and it is holding the gains despite all the market weakness. So, perhaps in the next couple of weeks we might see a further move and 5% to 8% sort of move in stocks like Biocon should not be ruled out even from the current levels. But instead of going naked buying, just considering this volatility, it would be better if one can protect by buying ATM put itself.
