Morning Calls

Nifty may get strong support at 4800 level

Once again consensus has failed in the market. The 4200 and 4300 put build-up, especially after a buy figure of FIIs in the index options segment, has raised many eyebrows. Shorting was certainly not advisable around 4800, as it was a strong support, but we didn’t recommend buying either. There was a strong wave of negative sentiments in the market, as even from a bounceback to 5100 during end-May didn’t result in a significant fall in implied volatility. Then, we had another 200-point fall and now back to 5100. But this time, IVs have fallen to 23.95%. These changes will certainly divide the participants on where the market is heading. We still belong to the sell on the rise camp. In this bounceback, too, we are not seeing any meaningful formation of long positions or a significant cash-based buying by FIIs. There is still a lot of room in the form of open interest, at least in index futures to form fresh shorts by participants and still it won’t be in the oversold zone. We have seen a lot of selling calls of strike 5100 and 5200, which have not seen any significant unwinding in them. This zone is a strong resistance. So, we won’t suggest any buying in the index now. Though not in the beginning of this series, but now, 4800 is emerging as strong support. As of now, it seems that the market may get stuck into the range of 4800-5200 and we are heading towards a higher side of the range. For next few days, we expect the market to consolidate and in this phase of consolidation, mid-caps and small-caps may outperform major indices. Siddarth Bhamre, Head-Equity Derivatives, Angel Broking

Heard on the Street

Some foreign institutions, in the past few sessions, have been buyers in telecom shares, which have been among the best performers in the week so far. The market buzz is that a US fund, which has stakes in United Spirits and Cox & Kings, bought sizeable chunks of Idea Cellular recently. Idea shares closed at Rs 55.85, up 4.5% on Thursday. Some foreign investors, including the fund managed by a star fund manager of yesteryear — before he was tripped up in a regulatory probe — are speculated to have bought shares of Bharti Airtel recently. On Thursday, the stock rose 1.2% to Rs 273.50. Brokers said many investors are of the view that telecom stocks are unlikely to fall below their lows touched recently. With the buzz of a stake sale in Reliance Communications growing louder, investors are betting that telecom shares will command better valuations hereon. Pvt insurers lap up ONGC ahead of EGoM meet Priavte insurance companies are believed to have mopped up shares of Oil and Natural Gas Corp (ONGC) on Thursday. The stock rose 2.4% to Rs 1,210.75 on Thursday. The buying has come ahead of the meeting of the Empowered Group of Ministers (EGoM) on June 7, when oil price deregulation could be discussed. The market is betting that the government could decide on deregulating oil prices, if not fully. ONGC is believed to have met investors and trade on Thursday, a day after the bulk deal of 39.2 lakh shares. The stock closed at Rs 560.10, down 0.8%, with less than 50,000 shares being traded on both exchanges combined. On Wednesday, GPC Mauritius II LLC, a subsidiary of Greater Pacific Capital Partners, had sold its 4.8% stake in the company to a clutch of institutional buyers. Only GMO Emerging Market Fund’s name (the fund bought 7.8 lakh Torrent shares) showed up in the disclosure on the BSE website. Dealers tracking the stock say the Icy Icy Mutual Fund, Kala Patthar Mutual Fund and the South-based Satyam Shivam ... were the other prominent buyers of the stock. However, since these fund houses bought shares across various schemes, their names did not show up on the buyer’s list. Contributed by Nishanth Vasudevan & Santosh Nair

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Src: ET, DP blog and etc