“Going by the monthly put options on the Nifty seems like a good idea where we feel that these put options can double or even possibly triple from the current levels,” says Rahul Sharma, JM Financial Services.

Third straight day of decline and today it is around 200 points down, that is what we are looking at the benchmark. Where do you see support levels to come in for the Nifty?
Rahul Sharma: Clearly, this is another breakdown in the works and Nifty seems like the 24,700 low that we made on the 7th of October should be broken anytime soon. Well, the meaningful support is placed in the vicinity of 24,500, 25,400. So, another 300 to 400 points can be taken off from the current level. And we feel that there is still some time for the capitulation to happen. So, at this point in time since October has been heavily dominated by the bears, we feel that over the next two weeks we could see another round of volatility coming in and 24,400 is where we are seeing the Nifty at this point in time. Now, as you could simply buy the 24,500 put options of the monthly expiry which are currently trading at 108, 110. This can act as a hedge against your long positions or even if you want to have a short exposure in the market. Going by the monthly put options on the Nifty seems like a good idea where we feel that these put options can double or even possibly triple from the current levels.

And how is the auto index and the auto stocks looking like? Obviously, there is a fundamental reason behind this fall, but how is the index and stocks looking on the charts?
Rahul Sharma: Yes, absolutely, so auto index has enjoyed outperformance, but finally breakdown has happened, in fact this has led the correction. We have broken the 7th October lows in the auto index and now I think the index is headed towards the 24,500 mark which is another 2% on the lower side.

So, from an index perspective definitely there has been a breakdown and there could be more downside in the short to near term and as far as the stocks are concerned, Tata Motors is something which has been under pressure, like it has not participated especially in the last one month or so and now below 900 the stock is actually showing signs of capitulation. So, maybe apart from Tata Motors, rest others can follow suit. So, Maruti is something that we are keeping an eye on. This has come very close to 200-day exponential moving average. If that gets broken below 12,000, more weakness can come in in this stock as well.

What is your take coming in on the realty index exactly? What is it showing up right now because it has overtaken auto index as a top sectoral loser on an intraday basis, 3.5% downtick for the realty pack, but things have not been going well for the sector as a whole as well of late?
Rahul Sharma: Yes, so realty has relatively done well as compared to auto since last few days. It is only today’s session where we are seeing a proper dent coming into the index and today has been the kind of day where there has been no attempt for a bounce back even by the broader markets as well.

And going by the way the Nifty has moved below 24,800, realty will also get pulled into this. So, my sense is from an index perspective maybe around the thousand mark is where we can expect the index to slide down.

But having said that the macro structure of real estate stocks is relatively better and we feel these are the ones which will see a bounce back on a relatively quicker note once the market stabilises, once the Nifty stabilises. So, on a relative scale we would peg realty much higher than any of the other sectoral indices.